By Richard Branch, Senior Economist, Dodge Data & Analytics
BEDFORD, MA - February 21, 2018 - According to Statistics Canada, building permits grew 10% in 2017 to $94.9 billion CAD. When converted to U.S. dollars, the value of building permits rose 12% to $73.2 billion as the value of the Canadian dollar generally strengthened throughout the year.
The improvement of the loonie against the greenback was not surprising given the progress in the Canadian economy during 2017. The Canadian economy set a solid pace during the first half of 2017 with a growth rate of nearly 4% (annualized), leading all other G-7 nations. Canada’s unemployment rate dropped nearly one percentage point over the year to 5.7% in December, providing support to consumer spending as the labor market tightened. Business investment also showed signs of recovery following declines in 2016. Continued strength in the U.S. economy and stronger global economic growth has lifted demand for Canadian goods and services, leading to stronger export growth. The rate of economic expansion did ease slightly in the second half of the year, but for the full year GDP growth will be close to 3.2% - the strongest growth rate for Canada since 2011.
Nonresidential building permits gained 15% in 2017 to $35.4 billion CAD, fueled by large increases in the industrial (+17%) and institutional (+23%) sectors. Permits for healthcare buildings more than doubled over the year to $3.1 billion CAD due to large projects in Ontario, Alberta, and Quebec. Education permits meanwhile moved 13% higher to $4.6 billion CAD. Factory permits gained 55% to $2.8 billion CAD due to strong growth in Ontario, Quebec, and Alberta. Permits for commercial building construction rose by a comparatively tepid 5% in 2017 to $18.2 billion CAD. Warehouse permits rose 34% to $2.6 billion, while office permits moved 11% higher to $5.2 billion CAD. Bringing down the average, however, permits for retail construction dropped 9% in 2017 to $4.1 billion CAD.
Residential permits grew 9% in 2017, climbing to $59.5 billion CAD. Multifamily permits rose 14% to $28.3 billion CAD, while single family rose a mild 3% to $31.2 billion CAD. In terms of units, total residential units rose 5% to 220,412, with multifamily increasing 9% while single family fell 2% for the year. From a regional perspective, units permitted were up 19% in British Columbia thanks to solid growth in Vancouver, while housing units in Quebec rose 12%. Residential permits fell 3% in Ontario due to an 11% decline in Toronto.
The 2017 pace of permitting will be hard to match heading into 2018. Overall economic growth is expected to ease from 2017’s rate and residential markets in Ontario and British Columbia are expected to cool due to new federal and provincial regulations. Also, hanging over the Canadian economy is the significant downside risk posed by the elimination or significant retooling of NAFTA.
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Allison Heard | 104 West Partners | email@example.com
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