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Canadian building permits rebound in April

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Canadian building permits rebounded in April, although at a much slower rate than forecast, as commercial building intentions fell to the lowest level in more than a year.

Building permits increased 1.1 percent to $6 billion in April, following two consecutive months of declines, Statistics Canada reported today in Ottawa. Permits fell 3.2 percent in March and 11.3 percent in February.

Economists forecast April permits to rise 4 percent.

Compared to April 2013, the value of permits were 13.4 percent lower, representing the largest annual drop since August 2013.

Higher construction intentions in the residential sector more than offset declines in non-residential projects, which declined sharply in April.

Building permits for single family-dwellings rose 2.8 percent to $2.1 billion in April, following two consecutive months of decline. Ontario led the increase, offsetting declines in five provinces.

Permits for multi-dwelling units increased 1.1 percent, largely the result of higher construction intentions in seven Canadian provinces.

The value of commercial permits for non-residential construction plunged 14.8 percent to $1.3 billion, the lowest level since March 2013. Commercial building permits declined in seven provinces, led by Ontario.

Higher construction intentions were posted in most metropolitan areas, Statistics Canada showed. Nineteen of 34 census metropolitan areas saw the total value of permits increase in April, led by the western province of Calgary, the capital of Canada’s oil and gas sector.

Regionally, the total value of permits increased in six provinces, led by Quebec. Following a gain of 12.1 percent in March, the western province of British Columbia had the largest decline in April, official data showed.

The reading disappointed the markets, which were hoping to see a bigger rebound in April. However, the residential component suggests housing activity is still supported, as low mortgage rates continue to fuel demand. Bank of Canada Governor Stephen Poloz has forecast a “soft landing” for the housing sector as record-high consumer debt begins to stabilize.

The BOC left its key overnight rate unchanged Wednesday, as expected. The Bank acknowledged the pickup in inflation, but said that was due to temporary factors such as higher energy costs. The Bank was disappointed with weak growth in the first quarter, but said strengthening foreign demand is expected to boost exports moving forward.

The focus on exports suggests the BOC is comfortable “talking down” the Canadian dollar, which fell to a four-week low against its US counterpart this week.

The Canadian dollar traded steady against the greenback following the release of April building permits. The loonie edged up slightly to 0.9147, advancing 0.08 percent.

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