Indicator Digest - CMS Forex

Building Permits

Building permits and mortgage approvals are forward looking indicators as they give an indication to future construction projects. In order to start construction on a home, a building permit must be issued, and this indicator captures the effect. The more homes that are being built and sold, the better that an economy is doing.

Main Indicator: Building Permits

Most Recent Release

May
6th, 2008

Actual

Forecast

Revised Form

-4.5%

1.1%

-0.8%

-1.0%

For March
Provided by: Statistics Canada

The Canadian housing market has been cooling, as permits have been steadily dropping. Building permits indicate buying intentions that that raise demand and translates to building intentions.

Approvals for the residential sector decreased 5.7% to $3.6million. A 4.6% increase in multi-family home approvals was overwhelmed by a 8.5% decrease in sing-family homes. This is consistent with a 5-year trend of the demand shift towards the less expensive multi-family dwellings.

Non-residential building permits also declined, though at a slower rate of 2.4%. Comericial property permits increased 5.3%, whereas industrial permits plunged 21.9%. Institutional component also fell 4.7%.

From the release:

Construction intentions in Canada continued to cool. As a result of a marked decline in Alberta, the total value of building permits in Canada dropped 4.5% in March to $5.6 billion. This was the fourth decrease in five months. Both residential and non-residential sectors declined in March.

Table of Past Data

	7/5	8/3	9/6	10/4	11/6	12/6	1/10	2/6	3/6	5/6

Actual	21.4%	-0.4%	-11.3%	1.4%	-1.7%	6.8%	-9.9%	0.4%	-2.9%	-4.5%
Forecast	4.5%	-9.0%	-1.4%	1.6%	1.7%	0.5%	-1.9%	0.0%	1.0%	1.1%
Previous	-7.3%	21.4%	-0.4%	-11.3%	1.7%	-1.1%	6.8%	-9.9%	0.4%	-0.8%
Revised From	-8.4%	N/A	N/A	N/A	1.4%	-1.7%	N/A	N/A	N/A	-1.0%

Past Releases

March
6th, 2008

Actual

Forecast

Revised Form

-2.9%

1.0%

0.4%

N/A

For January
Provided by: Statistics Canada

"The value of building permits in January fell below the $6-billion mark for the first time since April 2007. An increase in the non-residential sector was insufficient to compensate for fewer construction intentions in the residential area."

Building Permits unexpectadly declined in January. The indicator is rather volatile month-to-month, but this is now the 3rd time in 5 months that permits have been negative.

February
6th, 2008

Actual

Forecast

Revised Form

0.4%

0.0%

-9.9%

N/A

For December
Official Release from Statistics Canada

"The total value of building permits reached $6.1 billion in December, a small 0.4% gain from November. A gain in housing permits more than offset the decline in non-residential construction intentions. The total value of permits peaked in May and June at $6.9 billion and has been on a downward trend in the last part of 2007."

January
10th, 2008

Actual

Forecast

Revised Form

-9.9%

-1.9%

6.8%

N/A

For November.
Official Release from Statistics Canada

November saw a decline in building permits as both residential and non-residential buildings contributed to the decline in November. The value of building permits stayed above the C$6 billion mark for a seventh consecutive month. On a year-to-date basis, "total value of building permits issued by municipalities from January to November hit $68.1 billion, up 12.4% from the total for the first 11 months of 2006." This total broke the total annual record of C$66.3 billion set in 2006.

This month, both the non-residential sector (-17.5%) and the residential sector (-5.0%) fell and the decline was spread across the country.

December
6th, 2007

Actual

Forecast

Revised Form

6.8%

0.5%

-1.1%

-1.7%

For October.
Statistics Canada: Building permits

Value of intended construction remained above the $6-billion level for 6 months in a row. There were high levels of Commercial(+23.1%) and institutional(+29.8%) intentions along with strong demand for multi-family units(+21.8%).

November
6th, 2007

Actual

Forecast

Revised Form

-1.7%

1.7%

1.4%

For September.
via Statistics Canada

The value of building permits eased from August, though it was still above C$6 billion. The residential sector gained, thought they were more than offset by declines in non-residential permits. Overall the trend is positive for the last 3 years, with total value of building permits climbing from C$4.6 billion to near C$6 billion per month. British Columbia declined 19.2%, Quebev 8.5%, and Alberta 5.9%. Residential building permits were up 27% in Ontario, counter to the trend with Toronto leading the way. "With still a full quarter to be accounted for, the value of non-residential permits was already above the annual totals for 2005 and 2006 in Toronto."

October
4th, 2007

Actual

Forecast

Revised Form

1.4%

1.6%

-11.3%

N/A

With CA$6.3 billion worth of permits issued by Municipalities, August marked the fourth consecutive month with building permits exceeding CA$6.0 billion in value, according to StatCan. The construction industry has been hot in the summer, and seems to be continuing. The residential sector remains strong contrary to the US.

Multi-family intentions declined (-4.3% to CA$1.4 billion), but was more than offset by the second highest monthly level of single-family permits(+2.2% to CA$2.5 billion). StatCan, attributed the continuing strength in employment, growth in disposable income, low inflation, and tight apartment vacancy rates to the reason for such a healthy housing sector.

September
6th, 2007

Actual

Forecast

Revised Form

-11.3%

-1.4%

-0.4%

N/A

August
3rd, 2007

Actual

Forecast

Revised Form

-0.4%

-9.0%

21.4%

N/A

July
5th, 2007

Actual

Forecast

Revised Form

21.4%

4.5%

-7.3%

-8.4%

Residential permits in May valued at C$3.71 Billion, a 2.4% increase from April. Non-residential ones totaled C$3.12 Billion, an increase of 56% from April. All provinces except Nova Scotia saw increases in overall permits.