3 Min Read
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.
The value of non-residential building permits fell by 14.6 percent, as construction intentions for institutional and industrial buildings tumbled by 41.8 percent and 24.7 percent, respectively.
The day's data helped boost the Canadian dollar, which gained strongly against the greenback.
Separate data showed the seasonally adjusted Ivey Purchasing Managers Index rose to 57.2 in February from 56.8 in January, surpassing analysts' expectations for a slowdown to 53.5.
A reading above 50 indicates an increase in the pace of activity. The unadjusted index rose to 57.8 from 53.6.
Taken alongside data earlier this week that showed an improvement in manufacturing growth, the Canadian economy seems to have had an easier time "weathering the weather" than the U.S. economy, said David Tulk, chief Canada macro strategist at TD Securities.
"The return to more normal temperatures south of the border should help provide another tailwind to the Canadian economy and keep the underlying recovery on track," Tulk said.
The Ivey measure of inventories rebounded to 53.3 from 48.4. While the employment gauge still showed hiring activity shrank last month, the pace of contraction eased to 49 from 45.1.
The prices index held steady at 65.2, but the supplier deliveries index tumbled to 44.6 from 51.6.
Editing by Chris Reese