The Conference Board of Canada economist, Robyn Gibbard offers the following insights on the building permit data for September.
The value of non-residential building permits was up slightly in September, contributing to the growth trend we have seen since April. Building permits now appear to be in their second growth cycle of the last two years. That is a promising sign for business investment and reflects relatively strong economic fundamentals.”
—Robyn Gibbard, Economist, The Conference Board of Canada.
- Total non-residential building permits issued in September increased 0.6 per cent compared to August. Building permits decreased 0.4 per cent year-on-year, but that is because last September was the peak of the previous growth cycle. Building permits have now grown in five of the last six months. This is consistent with a new growth spurt in non-residential building permits.
- Commercial building permits, which usually signal the construction of office and retail buildings, increased by an impressive 15.9 per cent year-on-year. Given that overall non-residential building permits decreased, that is a sign of continued strength of the commercial building market. Office vacancy rates remain very low in major metropolitan centres, driving this boom.
- Industrial and institutional permits both declined year-on-year. The weak industrial building permits are unexpected given current low industrial vacancy rates and we would not be surprised to see some growth in this sector over the next few months.
- Overall, we appear to be seeing our second growth spurt of the last two years in non-residential building permits. That buoys the outlook for building construction in the months to come. This is consistent with our latest Canadian Outlook, which forecasts that businesses will increase their real spending on non-residential buildings by 6.9 per cent in 2018.