The Daily. Tuesday, November 6, 2001

Building permits

The value of building permits issued by municipalities declined for a second consecutive month in September, as construction intentions in the commercial sector hit their lowest point in almost four years. Builders took out $3.2 billion worth of permits, down 1.2% from August.

Despite the decline, this was 4.4% above the monthly average recorded in 2000.

The value of non-residential permits fell 3.0% to $1.4 billion in September, after dropping 12.2% in August. Marked advances in industrial and institutional permits failed to offset a 17.6% loss in the commercial sector.

The value of housing permits rose a marginal 0.2% to $1.8 billion; only multi-family dwellings contributed to the gain. This was the fourth monthly increase in five months in the residential sector.

In the first nine months of 2001, municipalities issued a total of $30.0 billion in permits, up 9.2% from the same period in 2000. Both the residential and non-residential sectors contributed to this strong showing. The cumulative value of building permits has not surpassed the $30-billion mark as early as September since 1989.

Eighteen of the 26 census metropolitan areas showed advances on a year-to-date basis. The largest growth (in dollars) was in the Montréal area, where office building projects provided most of the advance. The value of permits in the Vancouver area also rose substantially, powered by strong construction intentions for multi-family dwellings.

Note to readers Unless otherwise stated, this release presents seasonally adjusted data, which ease comparisons by removing the effects of seasonal variations. The Building and Demolitions Permits Monthly Survey covers 2,500 municipalities representing 94% of the population. It provides an early indication of building activity. The communities representing the other 6% of the population are very small, and their levels of building activity have little impact on the total. The value of planned construction activities shown in this release excludes engineering projects (e.g., waterworks, sewers or culverts) and land.

Single- and multi-family permits move in opposite directions

Permits for multi-family dwellings rose 4.6% to $493 million, but single-family dwelling construction intentions declined 1.4% to $1.3 billion.

A continuing decline in mortgage rates and a low stock of vacant dwellings had positive repercussions on the housing market. However, declining consumer confidence, as recorded by the Conference Board of Canada in the third quarter, has introduced an element of uncertainty.

Among the provinces, Western Canada accounted for September's rise in housing permits; all provinces east of Saskatchewan posted declines. British Columbia (+9.1% to $223 million) recorded the largest increase (in dollars), owing to a considerable rise in multi-family permits.

For the January-to-September period, the value of residential building permits totalled $16.4 billion, up 7.4% from the same period of 2000. Gains in both single- and multi-family permits led to this increase.

At the provincial level, the largest growth (in dollars) on a year-to-date basis occurred in Ontario (+4.9% to $8.0 billion) and Quebec (+12.7% to $2.7 billion). Nova Scotia posted the largest retreat (-14.1% to $340 million).

Commercial component pushes down non-residential sector

September's reduction in the value of non-residential permits came solely from declines in projects valued at less than $1 million.

Permits worth more than $1 million, which generally result from decisions made several months before, remained stable. Thus, any possible impact of the September 11 terrorist attacks in the United States on non-residential building permits may not yet be fully seen.

The value of commercial intentions plunged in September for a second consecutive month. Municipalities issued commercial building permits worth $581 million, down 17.6% from August and the lowest value since January 1998. Reductions in the value of projects in the trade and service category, and in the office buildings group, were responsible for this drop.

However, permits in the industrial component rose 12.7% to $332 million in the wake of a strong gain in the transportation building category.

Following a sharp decline in August, the institutional component rebounded with a 10.4% gain to $468 million due to projects in the medical and hospital category. This increase was the sixth in the last seven months.

The largest decline in non-residential permits (in dollars) occurred in Ontario (-11.3% to $514 million), driven mainly by retreats in institutional and commercial permits in the Toronto area. In contrast, the largest increase was in British Columbia (+43.3% to $215 million), largely because of projects in the medical and hospital category.

The downward trend in non-residential permits is consistent with certain signals in the economy. Vacancy rates for office buildings climbed, industries lowered their use of production capacity and the Conference Board's business confidence index plunged in the third quarter. However, falling interest rates could have a positive impact on non-residential intentions.

Year-to-date momentum strong in the non-residential sector

The total value of non-residential building permits to the end of September was $13.6 billion, up 11.3% from the same period of 2000 and the best performance for any first-nine-month period since 1989. Most of the advance was related to a hefty 38.3% increase in the institutional component. The commercial component also contributed to the overall gain with an 8.6% advance; however, the industrial component was down 6.2% from the same period of 2000.

Value of building permits

Among the provinces, the tremendous increase in commercial permits in the Montréal area led Quebec to the largest advance (in dollars) in non-residential permits (+33.1% to $3.0 billion). Ontario came second (+6.1% to $5.5 billion), solely due to the growth in the institutional component. Manitoba posted the largest decline (-26.4% to $297 million), as the three non-residential components dropped.

Available on CANSIM: tables 260001-260008, 260010 and 260011.

The September 2001 issue of Building permits (64-001-XIE, $14/$145) will be available soon.

The October 2001 building permit estimate will be released on December 6.

To obtain data, contact Vere Clarke (613-951-6556; clarver@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Étienne Saint-Pierre (613-951-2025; saineti@statcan.gc.ca), Investment and Capital Stock Division.

Value of building permits