November 15, 2006

Economy

West continues to lead the way despite a decline in building permits

Brian Baker

Staff Writer

Building permits in the non-residential sector fell marginally in September by 0.3 per cent to $2.2 billion, thanks to a loss in the commercial sector that offset gains in institutional and industrial.

The minimal fall had little effect, however, on the third highest monthly level ever, due mainly to Alberta’s building permits, according to the survey published by Statistics Canada.

“This was not a surprise, given the back-to-back increases in the past couple of months. We have been expecting a slow down, and this confirms our expectations,” said John Clinkard, consulting economist with Canadata.

Calgary set an annual record high for building permits with municipalities approving $1.3 billion worth of permits in both sectors of the construction industry.

“The strength is a story we have told before. Alberta, Saskatchewan and Manitoba were a little higher than they have been in a while,” Clinkard noted. The monthly value of non-residential permits remained strong at $2.2 billion, except for July 2006.

The industrial component rose 3.2 per cent to $457 million, the fifth increase in the last six months. This is a direct result of utility building permits being issued in seven provinces.

Prince Edward Island recorded the highest increase in dollars for the industrial component. Industrial permits have been on an upward trend since January 2006.

PEI’s 10 turbine windfarm in Eastpoint is suspect for the back-to-back-increase in industrial. "PEI is still fairly strong; it increased 83 per cent las month. So there seems to be a significant amount of activity in that sector." Clinkard Added. "You have to be careful about PEI. Small is big there."

"Non-residential will generally exhibit moderate strength."

-John Clinkard Economist

Ontario experienced the largest drop in institutional permits after a successful August at $188 million, while Alberta had another strong monthly increase, hitting $214 million, the third highest level on record.

“Due to the strength in Alberta, there were some offsets and declines in other provinces, but basically, it was an Alberta story there,” said Clinkard.

Commercial components fell 11.6 per cent to $1.1 billion in September following a 12.4 per cent gain in building permits for the previous month.

A decline in the value of permits for office buildings in Ontario and Alberta was the reason behind the drop.

However, the drop in the commercial component had little effect on the continuing upward trend dating back to October 2005.

“Commercial in Ontario, although it is off a little bit from a healthy increase in August, is continuing to be a significant contributor to ICI in the country,” added Clinkard.

“Non-residential will generally exhibit moderate strength. The problem is the industrial sector and the problem is Ontario. It will be a bit of a drag since manufacturing has been slowing down in the past couple of months.”

On a national level, the value of non-residential permits was up 9.5 per cent from the first nine months in 2005.

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