Mixed Canadian data highlights hazy growth horizon
OTTAWA/TORONTO (Reuters) - The uncertainty of Canada's economic growth outlook was highlighted on Monday as data showing a huge drop in the value of building permits in April contrasted with another release showing robust purchasing activity in May.
The value of building permits unexpectedly plunged 21.1 percent in April from March on weakness in Ontario, Canada's most populous province, according to Statistics Canada.
Analysts in a Reuters poll had forecast a 6.0 percent decline from the near four-year high recorded in March. Statscan revised March's increase to 16.8 percent from an initial 17.2 percent.
April's month-on-month fall was the largest since the 23.7 percent drop recorded in January 2006.
Canada's high-flying housing market is expected to cool this year following a tightening of mortgage rules and forecasts for rising interest rates.
In the residential sector, the value of permits fell 12.6 percent on weakness in the multifamily component in Ontario. In the nonresidential sector the value dropped 33.2 percent on lower construction intentions for institutional buildings in Ontario.
"Overall, a weak report ... In particular, the softness in residential permits continues to suggest homebuilding activity will ramp down this year, with roughly a 10 percent drop in housing starts for 2011 from the prior year," said Emanuella Enenajor of CIBC World Markets.
The housing data, combined with fears about weakness in the U.S. economy, initially helped push down the Canadian dollar, though it later recovered.
At 10:35 a.m., the currency was at C$0.9783 to the U.S. dollar, or $1.0222, unchanged from Friday's North American close. Continued...