The economic reports from Canada last week painted a mixed picture. While on one hand, the labor market was seen to be steady, other reports pertaining to the housing market came out mixed.
Data released last week showed that Canada’s unemployment rate fell to 5.8% for July. This was better than expected as economists polled forecast that the unemployment rate would fall to 5.9%. In June, Canada’s unemployment rate was at 6.0%.
During the month, the Canadian economy added 54.1k jobs. This was much better than the median forecasts of 17.0k and higher from June’s gains of 31.8k. The data underlined the fact that it would be good enough of a report for the Bank of Canada to proceed with one more rate hike at one of the upcoming meetings.
However, other aspects of the economy painted a mixed picture, but it is unlikely to seriously alter any plans from the Bank of Canada.
Canada building permits fall in June
The latest data from Canada on building permits showed a surprise decline as fewer building permits were issued for the month of June. This retraced some of the gains made from the month before.
Official data released by Statistics Canada showed that the total value of building permits fell 2.3% to 8.09 billion Canadian dollars. This was higher than the median forecasts which estimated a decline of 1.2% for the month.
Building permits data for the previous month was however revised to show a modest increase of 4.8% to 8.28 billion Canadian dollars. This was up from the initially reported headline print of 4.7%.
The building permits report is seen as an early indicator of the construction activity in the region. The report is based on a survey of 2,400 municipalities in Canada which represent close to 95% of the population.
On a year over year basis, the total value of building permits issued fell by 5.6%. This came largely due to a strong spike in building permits in June last year. The total value of residential permits declined 5.7% to 5.19 billion Canadian dollars during the reported month.
The declines were seen driven by a fall in multi-family dwellings which fell 8.0% during the month. The declines were however offset by an increase of 4.6% in the non-residential permits.
The data also feeds into the GDP and unemployment statistics. The construction sector is seen accounting for 7% of total employment in Canada while housing-related spending contributes to one-sixth of the total GDP output.
Canada housing starts to post a strong decline – July
The data on the housing starts released last week for the month of July showed a strong decline with a drop in construction dwellings.
Official data released by Canada Mortgage & Housing Corp. showed that housing starts came in at a seasonally adjusted rate of 206,314 units. This was a decline of 16.2% compared to June’s 246,200 units.
Canada’s home sales were seen slowing over the past year. This was mostly on account of tighter mortgage lending rules and stricter scrutiny of foreign home ownership.
The construction of multi-family units dragged the headline print as it fell by 20.3% on an annualized basis.
In contrast, however, new house prices were seen rising higher. The gains were the first in nearly seven months. Data from Statistics Canada showed that new housing price index had increased 0.1% from the month before, matching estimates.