OTTAWA (Reuters) - The value of Canadian building permits issued in February fell by a greater-than-expected 15.9 percent, while purchasing activity in the economy resumed contraction in March, statistics released on Monday showed.
The fall in building permits, reported by Statistics Canada, was caused mainly by a large drop in commercial and institutional building projects, while residential permits stabilized with a 0.3 percent drop.
The overall number was the worst fall since the 16.0 percent registered in October and compared with a 3.5 percent decline forecast by analysts surveyed by Reuters. All the figures are seasonally adjusted.
“Despite a likely rebound in government spending, the construction sector clearly is now weighing much more heavily on the Canadian economy,” BMO Capital Markets economist Benjamin Reitzes commented.
“The decline in economic activity, manufacturing in particular, appears to be spilling over into the construction sector. But even with the gloomy headline, the residential figure provides some room for optimism.”
In a separate release by the Purchasing Management Association of Canada and the Richard Ivey School of Business, the Ivey Purchasing Managers Index fell to 43.2 in March from 45.2 in February.
A reading of 50.0 indicates that economic activity remained flat from the preceding month, while a lower reading reflects a slowing. It is not seasonally adjusted and there is no distinction between manufacturing and services.
However, the employment subindex rose to 46 in March from 37.5 percent in February.
“On balance, the weakness in this report is indicative of the overall economic malaise that appears to be quite pervasive in the Canadian economy,” TD Securities economics strategist Millan Mulraine said.
“Indeed, by the look of things, it does appear that the Canadian economy is poised for its worse quarterly performance on record, and this report only adds to this overall assessment on the state of the economy.”
The Canadian dollar lost ground on the building permits data, falling to C$1.2387 to the U.S. dollar, or 80.73 U.S. cents. It had reached an overnight high of C$1.2225, or 81.80 U.S. cents.
The currency was also pressured by a drop in the price of oil as well as lower equities, and shortly after 11 a.m.(1500 GMT) it stood at C$1.2430, or 80.45 U.S. cents.
Additional reporting by Ka Yan Ng in Toronto; editing by Peter Galloway