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The value of building permits increased sharply in March, rebounding with a double-digit gain following a particularly sluggish performance in February.

Contractors took out building permits worth $6.1 billion, a 27.4% increase from February. Both residential and non-residential sectors recorded comparable gains.

Intentions in the non-residential sector surged 30.2% to $2.4 billion, in the wake of strong performances in the industrial and commercial sectors that more than offset a slight decline in institutional intentions.

In the residential sector, both single- and multi-family components were on the rebound, pushing the value of permits up 25.6% over February to $3.7 billion. This was the highest level during the last five months.

The total value for permits in March was 0.9% higher than the monthly average during the last three months of 2006. The last quarter of 2006 was the strongest on record for the value of building permits.

Both residential and non-residential intentions recorded widespread gains among the provinces, with a few exceptions. In Manitoba, permits declined in both sectors. In Nova Scotia and Newfoundland and Labrador, intentions declined only in the residential sector.

Housing sector: Recouping February's losses

Intentions in the housing sector in March more than compensated for February's decline, thanks to a huge gain in permits for multi-family dwellings.

Municipalities authorized multi-family permits worth $1.3 billion, a gain of 65.3% and the highest level in the last four months. A total of 9,663 units were approved, up 38.3% from February.

The value of single-family permits almost regained losses in the previous month, increasing 10.7% to $2.4 billion. This was the third gain over the last four months. Municipalities approved 9,584 single-family units, up 5.3% from February.

Despite the substantial increase in the number of approved units from February, the downward trend of the past few months in the number of approved residential units has extended into March. The downward trend began in August 2006 following an almost continuous climb that started in March 2005.

Several factors still favour strong demand for housing, including continued strength in employment, still advantageous mortgage rates and rising disposable income. However, there have been recent declines in consumer confidence, while affordability may be affected by the continued rise in new housing prices.

Provincially, Ontario posted the biggest gain (in dollars) in the total value of residential permits (+25.7% to $1.2 billion), with strong gains in both single- and multi-family permits.

British Columbia and Alberta also had significant gains in the value of permits, and Alberta's level was the second highest on record for residential intentions. The value of multi-family permits increased strongly in both provinces. Alberta recorded a slight gain in single-family permits while they declined in British Columbia.

Quebec had a robust increase in the value of single-family permits, which reached $468 million, the highest value since October 2004.

Newfoundland and Labrador experienced big declines in both single- and multi-family permit values, offsetting large gains in February.

On a quarterly basis, the value of residential permits for the first three months of 2007 hit $10.3 billion, down 5.8% from the fourth quarter of 2006.

First quarter single-family permits amounted to $6.9 billion, up 1.5%, while the value of multi-family permits fell 17.7% to $3.4 billion.

Municipalities approved 55,018 residential units in the first quarter, down 6.8% from the last quarter of 2006.

Non-residential: Surge in commercial, industrial permits

March's 30.2% gain in the non-residential sector came from vigorous growth in construction intentions, spread across most provinces and in 26 of the 34 census metropolitan areas.

In the commercial component, the value of construction projects totalled $1.5 billion in March, a 43.1% increase, following a 21.3% decline in February. This gain took the value of commercial permits to their second highest value on record, surpassed only by the record $1.6 billion set in October 2006.

While the increase came in large part from major projects for office buildings as well as in the recreation category, gains were recorded in every type of commercial buildings.

Provincially, the largest gain (in dollars) in this component occurred in Alberta, where strong demand for office building space and projects for hotels contributed in large part to the strong showing. Quebec and Ontario also reported sizeable gains.

In the industrial sector, the value of permits bounced back 37.6% to $423 million, after a 53.5% decline in February. The gain came from construction projects for plants.

In March, increases in industrial permits were recorded in every province except British Columbia. The largest gain (in dollars) by far was recorded in New Brunswick, where the value of industrial permits reached a new record high of $58 million, thanks to large projects for plants.

The overall trend in the industrial sector has remained relatively flat since September 2006, after a marked increase throughout the first three quarters of 2006.

In the institutional sector, the value of permits edged down 1.3% to $494 million, the third decrease over the last four months. An increase in construction intentions for medical buildings was offset by a decline in the value of permits for education buildings. The value of institutional permits has been on a declining trend since October 2006.

Provincially, Alberta posted a large decline in the value of institutional permits with significant retreats in the medical and education categories. This decline followed a very high level in February.

Meanwhile, in Ontario, institutional permits surged 59.7% after a 50.8% decline in February. The major factor in the turnaround was proposed projects for hospitals.

On a quarterly basis, the cumulative value of non-residential permits reached $6.9 billion in the first quarter of 2007. This was a 5.3% decline from the $7.3 billion worth of permits issued in the last quarter of 2006, which was a quarterly record.

The biggest decline occurred in the commercial sector (-9.8% to $4.3 billion), followed by the second consecutive quarterly decline in institutional permits (-1.9% to $1.6 billion). The value of industrial permits increased 5.4% to $1.4 billion, the highest level since the first quarter of 1989.

Several factors could have had a positive impact on non-residential construction intentions. These include strong demand for office space in several centres, advantageous interest rates and high corporate profits. In addition, according to Statistics Canada's most recent Business Conditions Survey, manufacturers were optimistic about prospects for production and employment for the second quarter of 2007.

Metropolitan areas: Majority showed quarterly declines

The value of building permits declined in the first quarter of 2007 in a majority of metropolitan areas for both residential and non-residential sectors. Overall, the total value of permits declined in 21 of the 34 census metropolitan areas. The largest decline occurred in Vancouver after a quarterly record set in the last three months of 2006.

Other significant declines occurred in Montréal, Halifax, Calgary and London. In Halifax, the value of building permits fell to its lowest quarterly level since the fourth quarter of 2001. The first-quarter value in London was the lowest quarterly level since the last quarter of 2003.

On the other hand, new quarterly records were posted in Saint John, Québec, Greater Sudbury, Saskatoon and Victoria.