Canadian building permits showed signs of recovery in August, with strong gains in non-residential construction offsetting weakness in residential building intentions. According to Statistics Canada, the total value of building permits rose by 3.4% from the previous month to a seasonally adjusted 11.86 billion Canadian dollars ($8.73 billion).
Reversal from Previous Decline
After a decline of 1.5% in July, the increase in building permits comes as welcome news for the construction industry. However, on a year-over-year basis, the overall value of permits issued in August was still down by 5.9%, primarily due to a sharp fall in residential construction plans.
Importance of Building Permits
Building permits are an early indicator of construction activity in Canada and are based on a survey of 2,400 municipalities, representing 95% of the country’s population. It’s important to note that the issuance of a permit does not guarantee immediate construction.
Residential Sector Highlights
Despite the fourth consecutive increase in single-family buildings, intentions for residential construction declined overall. Statistics Canada reported a 3.7% decrease in permits for single-family dwellings, totaling C$6.83 billion. Meanwhile, permits for multifamily dwellings were 9.5% lower. On a positive note, intentions to build single-family homes increased by 5.5%.
Influence of Construction Costs
Taking into account changes in construction costs, the value of single-family home permits stood at approximately C$1.5 billion in August. However, this amount remains below the pre-pandemic monthly average of C$1.8 billion in 2019, highlighting the ongoing impact of Covid-19 on the industry.
Nonresidential Buildings Show Promising Growth
In contrast to the residential sector, permits for nonresidential buildings experienced a significant jump of 14.8% to C$5.03 billion. The provinces of Ontario and British Columbia drove these gains, according to the agency.
Overall, the rebound in Canadian building permits in August provides hope for the construction industry, especially with the strong performance of non-residential construction offsetting the weakness in residential building intentions.