-Bank of Canada
Canada's building permits declined more than expected in May as builders intended to construct fewer multi-family homes and institutional facilities. The value of building permits issued in May plummeted 14.5% from April to C$6.7 billion, far worse than the expected 5% decline. The drop followed the 12.1% surge in the preceding month. Even though the data is notorious for high volatility, the report added to signs that the Canadian economy struggled to regain momentum after shrinking in the first quarter. Building permits in the residential sector slumped 13.5% as intentions for multi-family homes plunged 22.9%, marking the second consecutive month of declines. Meanwhile, permits for single-family homes dropped by 5.5%, the third decrease in four months. Non-residential permits slid by 16.0% as intentions for institutional buildings fell 34.0% on lower building plans for medical facilities.
Canadian economists have been keeping an eye on the housing situation very closely, particularly in light of increasing household debt and a surprise rate cut by 25 basis points to 0.75% in January. Meanwhile, markets are beginning to price in another rate cut in July, due to poor economic data coming out of Canada in the beginning of the second quarter.
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