The value of building permits declined in July

The value of building permits issued by municipalities declined in July as construction intentions for industrial buildings lost ground from June's very high level. Builders took out $5.3 billion worth of permits, down 2.3% from June.

The value of non-residential permits amounted to $1.9 billion, a 12.7% decline from June. The drop was solely the result of a decrease in industrial permits. In June, a burst of industrial projects in Alberta sent the value of non-residential permits over the $2.0-billion mark for only the sixth time.

The value of construction intentions increased in both the commercial and institutional components. Despite July's drop, the value of non-residential permits has been on an upward trend since the end of 2005.

In the residential sector, the value of permits totalled $3.4 billion, up 4.6% from June as the demand for new housing increased for both single- and multi-family dwellings.

A new record high in the value of housing permits in Alberta inflated the national figure. If Alberta had been excluded from the total, the value of housing permits would have remained virtually unchanged in July.

The value of residential permits, while slightly lower than the peaks reached in December 2005 and in the first quarter of 2006, remained significantly high from an historical standpoint.

Among the metropolitan areas, Calgary, Edmonton and Vancouver showed the largest advances (in dollars) for the first seven months of 2006 compared with the same period last year. The strong demand for new housing in these three centres was largely behind the gains.

Overall, 22 out of the 28 metropolitan areas showed advances on a year-to-date basis. All metropolitan areas West of Ontario posted double-digit growth.

Both single- and multi-family permits pulled up the residential sector

Builders took out $2.2 billion worth of single-family permits, up 2.7% from June and the highest level since January when the value totalled $2.4 billion.

The value of multi-family permits rebounded 8.5% to $1.1 billion, cancelling out an 8.5% decline in June.

The housing sector continued to be sustained by the strong economy in Western Canada as well as by the high level of employment and solid consumer confidence.

The value of housing permits in Alberta totalled $753 million in July, surpassing the previous record of $744 million set last February. The gain came from increases in both single- and multi-family components. This was also the case in Quebec and Ontario, where sizeable advances were also recorded in July.

In contrast, the largest decline (in dollars) occurred in British Columbia (-9.6% to $579 million), a third decline over the last four months. A marked decline also occurred in Nova Scotia (-33.1%) where the value of residential permits hit their lowest level since January 2005.

Since the beginning of the year, municipalities have authorized 134,840 new dwelling units, a slight 0.4% gain from the January-to-July period in 2005.

Among the approvals, 52.3% were single-family units, a slightly higher share than the proportion of 50.9% for the entire year of 2005.

Second straight monthly decline in non-residential sector

A major decrease in proposed industrial projects propelled the non-residential sector to its second consecutive monthly decline. However, July's level of $1.9 billion was 2.4% higher than last year's monthly average.

Following June's tremendous increase, the value of permits for industrial buildings reached $337 million in July, down 48.7% from June.

This decline came after a very high level of construction intentions in June for projects in the utility and manufacturing building categories in Alberta. All provinces showed losses, except Manitoba and Newfoundland and Labrador.

Despite the decline, the value of industrial permits has been on an upward trend since January 2006.

After a 24.6% decrease in June, the value of permits for the institutional sector advanced 8.2% to $454 million. Higher construction intentions in the educational and medical categories contributed to this gain.

Since October 2005, the value of institutional permits has been on a declining trend. Saskatchewan showed the strongest increase in this component as the level ($57 million) reached its highest level since August 1989. In contrast, Ontario recorded the largest drop (-33.5% to $130 million). It was the lowest level since July 2000.

In the commercial component, permits increased 1.2% following a 12.1% drop in June. The increase mainly came from a gain in the intentions for buildings in the trade and services category, and from projects for warehouses.

The value of commercial permits has been on an upward trend since October 2005.

Several economic indicators are consistent with the upward trend in the non-residential sector. In the second quarter, corporate operating profits were just short of the historic high reported in the fourth quarter of 2005.

In addition, retail spending continued to grow at a fast rate and commercial and office vacancy rates declined in several centers.

Among the provinces, Alberta recorded the greatest decrease in the non-residential sector, from $610 million to $356 million. However, this level remained 3.1% higher than last year's monthly average.

Of the 28 census metropolitan areas, 16 recorded monthly declines in the value of non-residential permits. The largest decline (in dollars) occurred in Calgary, while the largest gain was in Winnipeg.

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

Definitions, data sources and methods: survey number 2802.

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

The August building permit estimate will be released on October 5.

To order data, contact Brad Sernoskie (613-951-4646 or toll-free 1-800-579-8533; bdp_information@statcan.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.