The total value of building permits in Canada decreased 2.1% to $9.7 billion in August. Although most provinces reported increases, notable declines in Ontario and British Columbia pulled the national results lower compared with July. On a constant dollar basis (2012=100), the total value of building permits fell 1.3%.
Residential permits decreased 8.3% to $6.4 billion in August, the lowest level since March. Ontario and British Columbia drove most of the decline. Construction intentions for multi-family units fell 15.9%, largely reflecting Ontario's decline (-24.3%). This was despite the approval of high value condominium projects in the city of Toronto. In contrast, single-family intentions were up slightly (+1.2%), led by a 15.7% gain in Quebec. Additionally, Newfoundland and Labrador (+0.7%) reported the first provincial increase in this component after six consecutive monthly declines.
Non-residential building permits rose 12.3% to $3.3 billion, led by higher construction intentions in Quebec and Alberta. Commercial building permits were up 14.9% nationally, supported by Ontario's third consecutive month of growth. A 10-storey office building permit in the city of North York contributed to Ontario's gains.
What It Is?
Measures the change in the number of new building permits issued by the Govt.
What Are The Fundamental Effects?
It is a key indicator of demand in the housing market. By tracking the issuance of permits, we can get a sense of how much and where future construction will take place.
How Does It Affect The Markets?
CURRENCY - A higher than expected reading should be taken as bullish for the Canadian Dollar, while a lower than expected reading should be taken as bearish for the Canadian Dollar.
STOCKS - A vibrant housing market is often seen as positive for shareholders, If the housing markets starts to surge when the rest of the economy is at full speed.
BONDS - A pick up in permit issuance is often bad news for fixed income markets, because a healthy housing market epicts a robust economy and inflation pressures are likely to accelerate.