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Statistics Canada reported a 20.7% rise in the value of building permits issued in July, far exceeding expectations and revealing remarkable strength in the construction sector. The seasonally-adjusted value of the permits came in at a record C$ 7.69 billion. A survey by Reuters had given a median forecast of just 1.0% growth for the overall headline rate.
Strength in the residential component was modest, with only a 4.1% increase, but the value of non-residential permits surged 45.5% after a 7.2% decline in June. The commercial component rose 89.%, industrial increased 11.6%, while institutional fell 6.5%.
Such a large increase in permits suggests a huge injection of money into the economy, with positive implications for employment. The Canadian economy grew at just 1.7% in the second quarter, but the Bank of Canada, in its July monetary policy report, projects growth will be 3.8% during the third quarter.
The central bank decided to keep its benchmark lending rate unchanged at 1% at its last monetary policy meeting, citing slack in the economy, but Canadian employment data released last week was surprisingly strong, with 59,000 workers added to the payroll in August, almost three times as many as had been expected by a Bloomberg survey beforehand. US payrolls increased by 169,000 last month, a solid result that nevertheless undershot expectations.
Figures for Canadian housing starts in August are released tomorrow.
By mid-afternoon in New York, USD/CAD had fallen 0.42% to 1.0361.