Municipalities issued $4.0 billion worth of building permits in November, down 2.7% from the record reached in October. Despite the decline, the level remained high as construction intentions revolved around the $4.0-billion mark for the fourth time in the last five months.

The residential component declined 7.8% to $2.4 billion in the wake of retreats in both single- and multi-family permits. However, this decline has to be put in a perspective as the November's level remained 30.8% higher than the average monthly level recorded in 2001.

Propelled by a record-high in the value of institutional permits and by a growth in the commercial sector, the value of planned non-residential construction increased 6.3% to $1.6 billion in November.

On a year-to-date basis, the total value of permits reached $42.5 billion, which is already higher than any annual total on record. This is up 17.0% from the same period in 2001. The considerable demand for new housing is the factor behind the new record set in 2002. From January to November, municipalities authorized the construction of nearly 199,000 dwelling units. For the first time since 1989, the 200,000-units mark will be surpassed for a single year.

Regionally, Toronto and Vancouver led the pack among the 28 census metropolitan areas in terms of growth (in dollars). In both areas, it was the strength in the residential sector that was the factor behind these remarkable growths. Advances in the cumulative value of building permits from 2001 occurred in 25 out of the 28 census metropolitan areas.

The single-family permits were down from the October's record high

After three consecutive monthly gains that led to a record high in October, the value of single-family permits dropped 8.8% to $1.7 billion. The construction intentions for multi-family dwellings moved in the same direction and declined 5.2% to $674 million.

The strength in the housing market had a positive impact on several sectors of the economy. Job gains in the construction sector totalled 48,000 from January to November and the sales of home furnishings and electronics recorded healthy increases in the second and third quarters of this year. Furthermore, the strong demand for new housing in the country continued to support the wood products industry despite the reinstatement of US duties on Canadian exports of softwood lumber in May.

In October, the largest decrease in residential construction intentions came from Ontario (-10.6% to $1.0 billion). This is the province's lowest monthly level in 2002. However, this level is 15.1% higher then the average monthly level reported in 2001. In contrast, Nova Scotia posted the largest increase (+33.6% to $66 million).

Healthy results in the residential sector were recorded in all provinces, territories and metropolitan areas. Consequently, the value of residential building permits from January to November totalled $27.0 billion, a 34.4% jump from the same period in 2001. Strong gains were recorded in both the single (+34.5%)- and multi-family (+33.9%) components.

Record level in institutional construction intentions in November

Propelled by a record-high in the value of institutional permits and by a growth in the commercial sector, planned non-residential construction increased 6.3% to $1.6 billion in November. This follows a large 12.7% increase in October.

The institutional component led the way with a 10.8% increase from October to $593 million, the best monthly result ever and a fourth monthly level in 2002 surpassing the $500 million mark. The record came mainly from gains in construction plans in the medical and hospital category; this category recorded its second highest value ever. Among the provinces, Quebec showed the highest growth for the institutional component, mainly due to the educational category.

The commercial component also contributed to November's monthly increase, up 7.7% to $707 million. Most of this component's rise came from the office building, recreation building and trade and services categories. Ontario recorded the largest gain in this component.

Permits in the industrial component fell 5.6% to $263 million due to significant reductions in the transportation and manufacturing building categories. After recording substantial increases, both Quebec and New Brunswick showed the largest losses in November, while the strongest gains were in Ontario and Newfoundland.

Mixed signals emerged from the manufacturing sector. A third consecutive quarterly increase brings the industrial capacity utilisation rate within range of the last peak of 85.5%, which was reached in the third quarter of 2000. Although the capacity utilisation recovery could have a positive impact on industrial construction intentions other indicators showed a less positive view. Following two quarters of optimism, the mood among manufacturers was somewhat more guarded in October, as producers indicated some concerns over lower production prospects and unfilled order levels for the fourth quarter according to the Business Condition Survey.

At the provincial level, Quebec recorded the largest increase (+25.7% to $318 million) due to an increase in educational projects in the Montreal area. In contrast, Manitoba had the most significant monthly decrease in terms of dollars (-46.9% to $22 million), as large projects in the educational project category inflated the overall figure in October.

On a year-to-date basis, municipalities issued $15.5 billion in permits for the non-residential sector, down 4.5% for the same period in 2001. Most of the decline was related to weaknesses in the commercial (-6.7%) and industrial (-13.7%) components. In contrast, the institutional recorded a gain of 6.4% so far this year, with the government and administrative, religious and social home categories already surpassing their total values of 2001.

Among the provinces, the largest year-to-date decline in the non-residential sector was in Quebec (-13.5% to $3.1 billion), mainly due to the commercial and industrial components. On the other hand, fuelled only by a surge in the institutional component, the strongest gain occurred in Ontario (+7.5% to $7.1 billion).

Of the 28 census metropolitan areas, 16 recorded year-to-date decreases in the value of non-residential permits. The largest decline occurred in the Montreal area followed closely by the Toronto. Both areas were down from last year mainly because of fewer construction intentions in the commercial category.