Building permits

The overall value of building permits fell for the third time in four months in July as industrial and commercial intentions declined, and the value of housing permits showed only a modest increase. Municipalities issued $4.9 billion worth of building permits, down 3.0% from June.

The decline came in the wake of a 1.0% increase in June. Still, July's level remained 5.2% higher than the average monthly level in 2004, which was a banner year.

The value of housing permits edged up 1.3% to $3.2 billion, as an increase in the single-family component more than offset a slight decline in the value of multi-family permits. Increases in the last four months contributed to extend the upward trend recorded since the beginning of 2003.

Contractors took out $1.7 billion worth in non-residential permits, down 10.2%, and a third monthly decline since the record of $2.2 billion set in March. These retreats contributed to the flattening of the upward trend observed since the beginning of 2004 in the non-residential sector.

Retreats in the value of industrial and commercial permits more than offset a jump in the institutional component.

The constant strength in the housing sector as well as the good results in the non-residential sector led the cumulative value of overall permits to $34.6 billion, a 9.3% jump from the same period last year. Permits in the non-residential sector surged 19.3%, while the residential sector showed a more moderate 4.2% increase.

Among metropolitan areas, the largest advance (in dollars) on a year-to-date basis occurred in Calgary and Edmonton, driven by gains in both residential and non-residential sectors.

Residential sector: Both single- and multi-family permits remain high

The value of single-family permits increased 2.3% to $2.1 billion in July, the third gain in four months. Permits for multi-family dwellings slipped 0.6% to $1.1 billion. However, permits for multi-family dwellings surpassed the $1 billion mark for the sixth time since the beginning of the year.

Advantageous mortgage rates, the favourable job market, high levels of consumer confidence and the strong resale market are factors that explained the positive results in the residential sector.

Provincially, the largest gain (in dollars) in July occurred in Quebec. The value of building permits in Quebec increased for a fourth consecutive month in July to $822 million; a new record high which is explained by the high demand for new apartment/condo units. In contrast, British Columbia posted the largest decline as the multi-family segment retreated to its lowest level since December 2004.

Since the beginning of the year, the value of single-family permits reached $14.4 billion, up 1.7% from the same period in 2004 although the number of units authorized declined 6.0% to nearly 70,900 units. The value of multi-family permits increased 9.4% to $7.6 billion and the number of multi-family units totalled 66,740, up 1.8% from last year.

Provincially, the largest advance in the cumulative figures occurred in Alberta where the value of housing permits advanced 23.3%. The national figures for residential permits were greatly inflated by Alberta. If we exclude Alberta, the cumulative growth since the beginning of the year would be 1.4% instead of the 4.2% recorded at the national level.

British Columbia and Quebec also posted sizeable gains in comparison with last year.

Value of industrial and commercial permits declines

A substantial gain in institutional permits in July failed to offset declines in the industrial and commercial sectors.

After recording levels over the one billion mark four times since the beginning of the year, commercial intentions dropped in July, falling 23.1% to $791 million. This was the lowest level since May 2004. The decline came from a fall in the value of permits for office buildings in Ontario after a jump in June.

Following a substantial increase in June, intentions for industrial construction tumbled 17.8% to $332 million, with manufacturing buildings showing the biggest drop. Despite this decrease, the July level was 14.9% higher than the average monthly level of 2004. Quebec recorded the largest decrease with intentions down 42.8% to $68 million.

Construction intentions in the institutional sector continued their upward trend, increasing 29.0% to $536 million in July. The increase was based mainly on strong construction intentions in the medical and educational categories. Ontario experienced the greatest increase as a result of educational projects.

Of the 28 census metropolitan areas, half recorded monthly decreases in the value of non-residential permits. Vancouver recorded the largest decline due to lower construction intentions in the three components. In contrast, Edmonton recorded the largest increase due to a strong rise in the institutional component.

Among the provinces, the largest decreases in non-residential permits in July occurred in Ontario, down 17.8% to $592 million and the fourth decrease in a row. In contrast, Alberta recorded a 20.5% increase, the largest (in dollars) among provinces.

Despite a recent slowdown, the year-to-date results indicated that about $12.6 billion worth of non-residential permits were issued in the first seven months of 2005, up 19.3% from the same period of 2004. The non-residential sector reached a year-to-date record, with all classes of permits recording high levels. Builders took out $2.2 billion in industrial permits (+24.2%), $7.0 billion in commercial permits (+22.0%) and $3.4 billion in institutional permits (+11.5%).

These results are consistent with recent economic indicators. Among them, corporate profits continued to climb in the second quarter, retailers experienced their 15^th monthly sales gain in June since the start of 2004, office vacancy rates have declined and industrial capacity use hit a record level in manufacturing sector.

Among the provinces, Alberta had the largest year-to-date gain in the wake of strong increases in non-residential permits across the province. Quebec recorded the largest decrease due to a marked decline in the institutional component.

Available on CANSIM: tables 026-0001 to 026-0008, 026-0010 and 026-0015.

Definitions, data sources and methods: survey number 2802.

The July issue of Building Permits (64-001-XIE, $15/$156) will be available soon.

The August building permit estimate will be released on October 6.

To order data, contact Brad Sernoskie (613-951-4646 or 1-800-579-8533; bdp_information@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), Investment and Capital Stock Division.