Canadian data shows economic recovery taking hold

Wed Apr 7, 2010 12:37pm EDT
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By Louise Egan

OTTAWA (Reuters) - The Canadian economic recovery remains on track as purchasing activity jumped more than expected in March and building intentions were near a 2007 peak despite cooling slightly in February, according to reports on Wednesday.

Statistics Canada said the overall value of building permits slid 0.5 percent in February versus market expectations of a 2 percent gain, due to a sharp decline in construction plans for apartment buildings.

But analysts were not perturbed by the 7.5 percent decline in the value of residential permits, saying that supply in the housing market remains strong despite an expected surge in demand in the spring ahead of widely forecast interest rate increases later in the year.

"For the broader economy, the permits data while having softened over the last four months and suggesting some cooling in the appetite for the new build sector, does not alter the overall profile of the Canadian economy, which continues to reflect a better than anticipated economic recovery," said Stewart Hall, markets strategist at HSBC Canada.

Building permits were up 56.7 percent from a year earlier, when their value hit a record low, and hovered near the 2007 peak.

Building permits for single-family dwellings rose 3 percent to a record high. But multifamily units tumbled 28 percent.

The nonresidential sector climbed 16 percent, buoyed by commercial building intentions, which jumped 27 percent on plans for hotels and office buildings. Approvals of industrial buildings advanced 2.1 percent while those for institutional buildings fell 0.4 percent.

Following the housing data, the Canadian dollar retreated slightly from near a 21-month high against the greenback to C$1.0037 to the U.S. dollar, or 99.63 U.S. cents, from about 99.72 U.S. cents before the release.   Continued...

<p>Commuters wait for buses in front of a Hudson's Bay store in downtown Ottawa July 16, 2008. REUTERS/Chris Wattie</p>