Canadian building permits increase 7.4 percent in October
Permits for building projects in Canada increased 7.4 percent in October, a sign more Canadians are prepared to invest in property. Economists forecasted a 1 percent gain in permit approvals, according to a median estimate gathered by Bloomberg.
Building permits are a leading indicator of future construction projects. A rise in the level of permits is an indicator of improved confidence in economic activity among individuals and businesses.
Canadian municipalities issued $7.2 billion worth of building permits in October, led by the residential housing sector. Residential permits soared 6.4 percent to $4.41 billion, edging closer to the record set in May. Ontario posted the highest gains in both multi-family and single-family dwellings. Canadian municipalities signed off on the construction of 18,823 new dwellings, a gain of 6.9 percent from the previous month. Multi-family dwellings were up 12.2 percent to 12,465 units.
Construction intentions in the non-residential sector rose 9 percent to $2.8 billion, the sixth monthly increase this year. Gains were realized in half of the ten provinces, led by Ontario and Saskatchewan.
Canada’s housing market continues to outpace expectations, according to the Bank of Canada. Low mortgage rates are keeping demand elevated, despite tighter lending rules, which were enacted in 2012 to combat the perceived overbuilding of condos in Toronto and Vancouver.
Strong permit data supported the Canadian dollar, which cut short the greenback’s three-and-a-half year rally. The US dollar fell 24 pips to 1.0650 CAD in the North American session, but remains well supported amid strong domestic indicators in the US and a reduced appetite for commodity-driven currencies. The trend index shows a neutral outlook for the North American pair after it fell through the initial support at 1.0657.
According to strategists at the Toronto Dominion Bank, the 1.0550 region represents solid support over the short and medium terms.
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