Building permits

The value of building permits issued by municipalities rose 5.3% in March to reach their second highest level on record. Builders took out $5.5 billion worth of permits. While construction intentions remained high in the housing sector, the strong showing came largely from planned investments in non-residential building construction.

These results bode well for workers in both the residential and non-residential construction sectors, as permits are a leading indicator of building activity.

After a strong 15.3% increase in February, the value of non-residential permits surged another 15.1% in March to $2.1 billion. This level was 16.1% higher than the average monthly level in 2005, an exceptional year for the non-residential sector. The strong results in March came largely in the wake of hospital related construction projects.

In the housing sector, the value of permits remained unchanged from February and totalled $3.4 billion. A slight decline in the single-family component was offset by a gain in permits for multi-family dwellings. The housing sector remained very dynamic as the value of housing permits has been on an upward trend since the beginning of 2005 — thanks to the very strong market in Western Canada.

Regionally, 21 out of the 28 census metropolitan areas showed stronger results in the first quarter of 2006 in comparison to the same period last year. The largest advances (in dollars) were recorded in the metropolitan areas of Calgary, Edmonton and Vancouver, thanks to their hot housing sector. Furthermore, with the exception of St. John's, all metropolitan areas east of Toronto recorded faster starts to the year than 2005. Toronto, with declines in both residential and non-residential components, showed the largest retreat.

The demand for new single-family dwellings cools slightly

The value of permits for single-family dwellings declined a slight 0.6% to $2.2 billion in March, a second consecutive monthly decrease. Despite these retreats, the level in March remained 6.3% higher than the average monthly level in 2005.

The value of multi-family permits reached $1.2 billion, up 1.1 % from February and a third monthly gain over the last four months.

In terms of units, the construction of 10,155 new single-family dwellings was approved by municipal authorities in March, down 1.7% from February. The number of new single-family units approved has declined in the last three months.

The number of multi-family units authorized in March totalled 9,590 units, up 1.7% from February. The recent gains contributed to the halt of the downward trend (for the demand of multi-family dwellings) in the last part of 2005.

A total of 59,100 new dwelling units were approved in the first three months of 2006. This was the best first quarter since 1990 when 61,600 new units were approved.

The housing sector continued to be positively affected by the very dynamic economy in Western Canada. Other contributing factors were advantageous mortgage rates, the continued strength in full-time employment and in personal disposable income along with the high level of immigration.

Provincially, the largest gain in housing permits in March occurred in British Columbia (+30.7% to $729 million) as the value of multi-family permits surged. Marked increases in the demand for both single- and multi-family dwellings led Nova Scotia to a new record high ($98 million). These gains were offset by declines in Ontario, Quebec and Alberta. In Alberta, the level in March was the second highest after the record high posted in February.

Institutional projects spur non-residential sector

The value of construction projects in the non-residential sector totalled $2.1 billion in March, a 15.1% jump from February and the fourth highest recorded monthly level. A strong gain in the value of institutional permits was the main factor behind this gain. The non-residential sector has been on an upward trend since November 2005.

Permits in the institutional sector increased a spectacular 52.6% to $773 million, a second consecutive monthly increase. March's result was the second highest level on record. The gain was based mainly on projects in the hospital category. The growing demand for health care services can explain the strong construction intentions for hospitals. Provincially, Alberta and Ontario reported the largest increases in this component. By contrast, the largest decline (in dollars) was in Quebec following a very robust level in February.

In the commercial sector, the value of permits rose 3.0% to $1.1 billion, a third monthly gain over the last four months, as a result of higher intentions in the trade and services category and service stations. The largest contributions to the monthly gain (in dollars) in this component came from Ontario (+9.8% to $429 million) and Quebec (+17.3% to $180 million). In contrast, Saskatchewan recorded the largest drop, falling 44.1% to $20 million.

After a strong 38.0% increase in February, the intentions for industrial construction declined 6.7% to $258 million. The utility category showed the largest decline, followed by manufacturing buildings. The most significant decrease among the provinces for this component occurred in Alberta, with a 32.0% drop to $40 million.

The largest contributions to the monthly gain (in dollars) in the non-residential sector came from Ontario (+29.8% to $883 million) and Alberta (+42.8% to $480 million). Alberta set a new record level in March. Quebec posted the largest drop, falling 21.0% to $299 million.

Non-residential permits were up in 14 of the 28 census metropolitan areas. The largest increase (in dollars) occurred in Ottawa, where all three components rose. In contrast, Montréal recorded the largest decrease, mainly the result of a drop in institutional permits.

The recent results in the non-residential sector could be explained by the strong retail sales, the high utilization of industrial capacity, the record high operating profits earned by Canadian corporations, the lower vacancy rates for commercial buildings and favorable interest rates.

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

Definitions, data sources and methods: survey number 2802.

The March 2006 issue of Building Permits (64-001-XIE, free) will be available soon.

The April 2006 building permit estimate will be released on June 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 Bechir Oueriemmi (613-951-1165), Investment and Capital Stock Division.