The latest release on the value of building permits for Canada's CMAs by Statistics Canada provides an interesting perspective on a slowing economy. The numbers show that there has been a downward trend in the total value of permits since late 2012.
Figure 1 shows the ranking by CMA in the seasonally adjusted growth of the total value of building permits and the leaders of the pack are all smaller centres - Kingston, Sudbury, Thunder Bay, St. Catharines and Barrie. These smaller cities are such that one new government building or construction project is a big deal to the local economy. Of course, that effect can be symmetric once a key project ends as the bottom five worse performers are also all smaller centres. Of more concern is the performance of the big three: Vancouver, Toronto and Montreal which together account for about half of the value of building permits.
Figure 2 plots a five month moving average of the monthly value of residential permits for the big three while Figure 3 does it for non-residential permits. Toronto and Vancouver are exhibiting the more pronounced cooling of investment intentions as demonstrated by building permits. Residential permits in Toronto peaked in early 2012 and have been trending downwards since. Non-residential permits peaked even before - in about mid 2011 and have since exhibited some ups and downs. Vancouver has also seen a drop in the average value of permits for both residential and non-residential permits over the last six months.
The more interesting case is Montreal. The moving average value of residential permits has been quite stable relative to the other two cities and has been so since late 2009. As for Montreal's non-residential building permits, well they were quite stable also up until 2011 when a large blip occurs. However, since late 2011, the 5-month moving average value of non-residential permits has been trending upwards.
The current slowdown in the Canadian economy does not seem to be hitting Montreal construction activity as hard as it might be hitting Toronto and Vancouver. I guess the more intriguing observation here is the stability of residential building permit values in Montreal at least compared to Toronto and Vancouver. For the period 2008-2013, a quick calculation of the mean and standard deviation of the monthly values of residential building permits yielded a coefficient of variation of 0.36 for Vancouver, 0.32 for Toronto but only 0.17 for Montreal. Montreal would appear to have a very stable new housing construction market.