Canadian building intentions are still high, but inflation is killing growth. Statistics Canada (Stat Can) data shows the value of building permits issued got a boost in November 2022. Higher rates have pulled back some building activity, though activity is still much higher than it was before 2020. The major threat to growth isn’t rates, but inflation—which is eliminating most productive gains quickly.
Canadian Permit Values Climbed, But Remain Lower Than Last Year
Canadian permit values made a substantial climb, according to Stat Can’s headline data. The value of permits issued hit $11.0 billion in November, up 14.1% compared to the previous month. However, it was a little lower than last November.
Canadian Future Building Intentions
The seasonally adjusted value of Canadian residential and non-residential building permits.
Source: Statistics Canada; Better Dwelling.
When adjusting for real terms, month-over-month growth was even less impressive. Once again, the agency led with a 12.3% increase for the month when adjusted for inflation. November still came in 13.9% lower than the same month last year. In other words, the numbers are still relatively high but inflation is killing a lot of the real growth.
Residential Building Activity Is Still Higher Than Last Year
Typically housing accounts for the majority of permits, and the latest data was no different. Residential permit values jumped to $7.1 billion in November, up 13.7% from the previous month, and down 11.25% from the same month last year. Despite pulling back the value of residential permits is still running ~50% higher than pre-2020.
Residential permit values made a small increase compared to the prior month, but they’re trending lower from rock bottom rates. Growth is still running much hotter than before the 2020 cuts to interest rates, but now inflation is killing that growth. A lot more money for a lot less—the general theme across asset classes—even those correcting.