Canada March building permits surge, housing cools

Mon May 7, 2012 1:00pm EDT
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By Louise Egan

OTTAWA (Reuters) - The value of Canadian building permits unexpectedly climbed in March even while plans for home building softened for the third straight month, Statistics Canada reported on Monday, likely calming nerves among policymakers troubled by soaring property prices and debt.

Building permits issued by municipalities jumped 4.7 percent from February to C$6.5 billion ($6.5 billion), confounding market expectations of a 2.8 percent decline.

The increase followed a 7.6 percent gain in February, according to revised figures.

Intentions for residential buildings fell 1.3 percent in March as the value of permits fell by 1.7 percent for single-family dwellings and by 0.7 percent for multi-family dwellings.

Permits for non-residential buildings jumped 13.9 percent to C$2.9 billion ($2.9 billion), their highest level since June 2010. Plans for new government buildings and medical facilities in the province of Ontario helped push up construction intentions in the institutional sector by 88.4 percent.

Permits for commercial buildings rose 15.3 percent in value while those for industrial structures fell 42.8 percent.

The report is consistent with the Bank of Canada's prediction of stronger business investment in months ahead and suggests construction activity will provide a boost to economic growth, despite the weaker housing component.

"Although residential building plans cooled in the first quarter, the recent solid gain in full time employment in March, together with evidence a stronger sales of existing houses through April, suggests that residential construction and house related consumer spending will make a positive contribution to domestic demand into the second half of the year, said John Clinkard, economist at Deutche Bank in Canada.   Continued...