February building permits plunge

According to this article in the Globe and Mail, Canadian building permits took an unexpected plunge in February. The 22.4 percent drop was more than triple economist expectations.

“The magnitude of the decline is a function of the uncharacteristically robust level at which builders have been taking out permits,” said Stewart Hall, market strategist at HSBC Securities (Canada), in a note.

“Let’s not get carried away in spinning this as Canada’s own real-estate implosion.”

Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc., said that while the construction industry remains healthy, “the hefty retreat does support the view that housing activity will moderate in the year ahead.”

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markx
markx
13 years ago

From a fundamentalist's point of view, plunging permit is a BULLISH news, as less permits lead to less supply a few years down the road. Anecdotally, the labor shortage in GVRD doesn't seem too bad at this point, but many trades people are moving to BC interior for better pay and lower cost of living.

duck
duck
13 years ago

swirlyman,thanks for the link. mish has some good things to say. i particularly liked his comments on inevitable changes in the RE industry.

Swirlyman
Swirlyman
13 years ago

Mish has some things to say about this report, as well as the glut of used cars coming onto the market in Canada.http://globaleconomicanalysis.blogspot.comHe figures Canada is trailing the U.S. by about 18 months.

blueskies
blueskies
13 years ago

One month of weak numbers doesn't mean Canada's real-estate industry is in trouble, a strategist said. what would two months indicate?am I correct in thinking this is a leading indicator?

Matthew
Matthew
13 years ago

I saw this as well, although on the Stats. Can. site where I was looking for something else. You can find the report there. Although they were down in January they were at the 2nd highest level ever in January. Also this report also includes permits for commercial and industrial construction.

one quiet observer
one quiet observer
13 years ago

As a further on the sub-trades I am aware of, they are mechanical contractors, the HVAC people, delivery on most of this type of equipment is 3 + months, cancelling a successfull low bid is saying we are sitting on it for 6 months! (3 months for re-tender) and 3 to wait for the equipment.

one quiet observer
one quiet observer
13 years ago

This does not at all suprise me. I know of at least 27 major subtrade contracts for developers that have passed the usual bid accepted deadline, which means they are allowing successfull low bids to expire rather then sign the contracts. This started in September of 06. I actually do not think most of our major developers are too nieve but on the other hand they will be very circumpect in not putting a panick into buyers of uncompleted but started projects. So they will never say we are delaying due to market but rather we have a shortage of crew, yet it is a fact that many subtrdes are struggling to keep there people busy!