"Housing starts may begin to slow in coming months from levels which continue to appreciably outpace underlying family formation "
- CIBC economist Peter Buchanan
Canada's building permits pointed to a sharp contraction in June, raising concerns about Canadian property market that tries to recover amid lukewarm economic conditions across the globe. Building permits plunged 10.3% in June compared to a rise of 5.8% in May and predictions of a moderate fall of 2.5%. However, the overall trend of building permits remained positive as June's decline was the first in six months. In the meantime, the pace of purchasing activity posted a surprise fall to 40.4 in July from 55.3 in June, while analysts called for an increase to 57.0 in July. A reading below 50 indicates that the pace of activity declined from the previous month.
On Tuesday, Statistics Canada reported that the country's trade deficit narrowed in June. Canada's merchandise trade balance approached $469 in June, down from $781 in May, as exports surged 1.4%, while imports added 0.6% over the period. The country saw a trade deficit for the 18th month in a row as strong Canadian Dollar hits exporters' profits. Exports to the U.S., which accounted for 74.3% of total country outbound shipments, added 1.4%, while imports dipped 0.8%. The Bank of Canada expects only a 1% growth in the second half of the year.
© Dukascopy Bank SA