Canada building permits soar, residential sector hits record

Thu Mar 6, 2014 12:05pm EST
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By David Ljunggren and Leah Schnurr

OTTAWA/TORONTO (Reuters) - The value of building permits issued in Canada surged in January, while the pace of purchasing activity unexpectedly picked up last month, suggesting some of the impact of unusually harsh winter weather may be dissipating in Canada.

Building permits jumped by 8.5 percent at the beginning of the year, data from Statistics Canada showed on Thursday, handily surpassing expectations for a 1 percent increase.

That marked a sharp rebound from December's revised drop of 4.8 percent, which analysts thought had been the result of winter storms that hit parts of Canada at the end of last year.

"(I was) surprised by the underlying strength, particularly given we thought there would be a bit of a weather effect and generally assuming we're going to see some moderation of housing activity," said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto.

Extreme winter weather has also impacted data south of the border, pointing to softer economic activity in the United States that economists expect will be transitory.

"It might be the case that we're seeing more of an impact in the U.S. data than the Canadian data," said Ferley.

Permits for residential dwellings - a figure watched closely amid fears of an overheated real estate market - jumped by 26.3 percent to an all-time high of C$4.60 billion ($4.18 billion). The previous record was the C$4.54 billion seen in May 2013.

The monthly figures are traditionally volatile and large swings are not unusual. Permits for multi-family homes rose by 42.8 percent after a 21.9 percent fall in December while intentions for single-family homes advanced by 15.0 percent.   Continued...

Residential and commercial buildings are pictured in Vancouver, British Columbia June 20, 2011. REUTERS/Jason Lee