CANADIAN BUILDING INTENTIONS IMPROVE, BUT INFLATION KILLED REAL GROWTH
Canadians are getting used to spending more and getting less, even when it comes to building permits. Statistics Canada (Stat Can) data shows total building permits made monthly progress in September, nearing new highs in seasonally-adjusted nominal terms. Before getting too excited, this growth was almost exclusively driven by state stimulus which tends to have an inflationary impact. Inflation-adjusted data shows the real dollar value peaked earlier this year and has slid in recent months.
Canadian Building Intentions Rise, But Less Than Inflation
Canadian building permit values. Seasonally adjusted in billions of dollars.
Source: Statistics Canada.
Building intentions climbed in dollar terms, almost exclusively due to inflation. The value of building permits increased by 11.5% (+$1.3 billion) to $13 billion in September. Stat Can noted it was the second-highest monthly value since the series started in 2017. Adjusting for inflation shows similar monthly growth, though it has declined since April.
Residential Building Intentions Improve, But It’s Lower Than 2022
Canadian residential building permits saw the total rise, but it remains muted. Total residential building permit values increased 7.5% ($540.8 million) in September to $7.7 billion. Monthly growth may not mean much in this context, as it was 8.7% lower than this past April. Zooming out also reveals this value is far from 2022 levels despite significant state intervention to boost activity.
Non-Residential Building Intentions Rip Higher On Gov Spending
Building intentions saw the bulk of its growth in the non-residential segment. The value climbed 18% (+$797.5 million) in September to $5.2 billion, the second-highest month on record. Ontario was behind most growth, specifically the provincial government’s subsidies to boost institutional building plans.
Canadian permit values rose, but a quick look at the details reveals how inefficient the balance has become. Both residential and non-residential building intentions increased almost exclusively due to government stimulus, typically a sign of a weak economy. Excess stimulus beyond market capacities tends to be inflationary and kills productivity. An issue emphasized in the inflation-adjusted data showing less progress.
Story by: Better Dwelling
