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Building permits drop for second straight month in August: StatsCan

Building permits drop for second straight month in August: StatsCan

OTTAWA - The value of building permits issued in August slipped for the second straight month amid growing anxiety about whether the Canadian economy is slipping back into recession.

The "disappointing" 10.4 per cent drop from July brought the total value to $5.9 billion for the month as both the residential and non-residential markets saw declines.

The figures confirmed recent softening in demand for new housing, especially condos, in part because of falling consumer confidence about the economy.

But a decline in building of offices, factories and other commercial buildings — the so-called non-residential sector — reflects weaker business confidence as well.

"Building permits tanked well before recession risk talk began to intensify in Canada, demonstrating that the impact of a marked decline in global risk appetite due to Europe's debt troubles and U.S. political theatrics took its heavy toll on business confidence over the late summer period," Scotia Capital economists Derek Holt and Karen Cordes Woods said in a note to clients.

CIBC said the statistics were "disappointing" in light of "expectations for a mild gain."

"On the residential side, both single family and multi-family permits fell, while commercial and institutional sectors were weakest on the non-residential side," CIBC economist Emanuella Enenajor wrote in a note.

"That marks the second monthly decline in permits, and taken together with August's easing in housing starts, hints that home-building in Canada is starting to shift into lower gear."

Confidence in the Canadian economy has been shaky in recent months as the European sovereign debt crisis and a sluggish U.S. economic recovery have threatened the recovery at home.

The jobless rate has edged up to 7.3 per cent and could go higher and it is growing harder for Canada's 1.4 million unemployed to find work.

The slower than expected global economy has weighed on the prices for key Canadian resource exports, dragging down stock markets and the loonie.

Most economists predict that Friday's key employment data from Statistics Canada will confirm the trend toward a weaker, but still growing economy. The consensus is for a gain of about 20,000 jobs, reversing August's decline of 5,000 jobs.

Statistics Canada reported Thursday the drop in building permits was mainly in Ontario, but Quebec, Saskatchewan and Nova Scotia also slipped, with the declines more than offsetting increases in the six other provinces.

In the non-residential sector, the value of permits fell 16.6 per cent to $2.3 billion, a second consecutive monthly decrease.

The residential sector saw the value of permits drop six per cent to $3.6 billion after three straight monthly increases.

SOURCE:By Craig Wong, The Canadian Press