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Canadian Building Permits Surge on Non-Residential Construction iIntentions

H.S. Borji
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Canadian Building Permits Surge on Non-Residential Construction iIntentions

Canadian building permits unexpectedly surged in June, as higher non-residential construction intentions in the province of Quebec pushed the value of authorizations to the second-highest on record.

The value of building permits increased 13.5 percent in June, following an upwardly revised gain of 15.4 percent the previous month, Statistics Canada reported today in Ottawa.

A median estimate of market analysts called for building permits to decline 2 percent amid expectations for a cool down in Canada’s housing sector.

Compared to June 2013, the value of permits was up 20.1 percent, official data showed.

The value of building permits, which are used to gauge future construction activity, has been on the rise since the beginning of 2014.

Authorizations for non-residential projects increased for the third consecutive month and at the fastest pace since July 2013, led by the French-speaking province of Quebec, which was responsible for most of the growth.

The value of non-residential building permits increased 32.5 percent, led by a 63.9 percent gain in industrial projects. Industrial permits rose due to higher construction intentions for information technology buildings in Quebec and utilities buildings in Ontario, StatsCan said.

The value of permits in the institutional component more than doubled in June, led by higher construction intentions for medical facilities in Quebec.

The housing sector showed some signs of cooling down in June, as the value of multi-family permits fell 6 percent. The decline was mostly due to lower construction intentions in Western Canada.

However, the value of single-family permits climbed for the third consecutive month at a rate of 5.5 percent, as six of Canada’s ten provinces reported gains in this category.

The total value of residential building permits increased 0.4 percent in June, the fourth consecutive monthly increase.

Higher construction intentions in June were reported in 20 of Canada’s 34 census metropolitan areas, official data showed. Montreal reported by far the largest gain, followed by Calgary.

In other data, the Richard Ivey purchasing managers’ index rebounded sharply in July after falling in June to its lowest level in six months. The monthly gauge of Canadian business activity rose 7.2 percentage points to 54.1, exceeding forecasts calling for 53.

A reading above 50 signifies expansion in business activity.

The Canadian dollar failed to generate momentum following the news, as escalating tensions between Russia and the West weighed on risk sentiment.

Earlier this week Russia proposed counter measures in response to Western sanctions imposed on the country over the Ukrainian crisis. The Russian government plans to ban all US agricultural imports and EU fruit and vegetable products for one year.

The list includes, among other things, poultry, milk powder, cheese and butter.
The Canadian dollar was little changed against its US counterpart, trading at 0.9160 US.

The USDCAD pair was trading at 1.0920. The daily chart shows initial support situated at 1.0888 and resistance at 1.0966. The pair’s recent surge has pushed it well above the long-run averages of 1.0884 (100-day simple moving average) and 1.0850 (200-day simple moving average).

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