Canada’s building permits rebound in May

The value of building permits in Canada soared in May after plunging the previous month, with non-residential activity again leading the swing.

Statistics Canada said Wednesday that permits jumped 20.9-per-cent during the month to US$6.4-billion, following a revised 21.5-per-cent drop in April.

The federal agency noted that higher construction intentions, particularly for commercial buildings in Quebec and Alberta and multi-family dwellings in Ontario, were behind the advance.

Economists had expected permits to rise by three per cent in May.

“While the increase, the largest in over two years, came in well above expectations, it simply reverses the preceding month’s surprisingly sharp decline,” said Peter Buchanan, at CIBC World Markets.

“The residential numbers are consistent with our call for a deceleration in that sector, while the strong rise in non-residential applications points to continued strength in business investment, one of the economy‚Äôs main drivers in Q1.”

Non-residential permits rose by 50.9-per-cent to $2.7-billion, following two straight monthly declines, with most of the activity focused on commercial developments in Quebec, Alberta and Ontario.

The residential sector increased 5.3-per-cent to $3.7-billion, after a 12.1-per-cent drop in April. Multi-family unit intentions in Quebec and Ontario accounted for much of the gain.

Karen Cordes Woods, at Scotia Capital, said [residential] housing permits have been declining as the Canadian housing markets start to moderate after reaching record levels or cycle tops in several housing metrics, including homeowner affordability, house prices and renovation spending.

Source: Financial Post

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