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Construction permits rise in November

Construction permits rise in November

Posted on: 1/10/2018 | Author: ATB Financial's Economics + Research Team

One of the best forward-looking indicators available to economists is building permits issued by municipalities. With this to guide us, the most recent read of permits suggests a slow down ahead for Alberta’s construction activity.

In November, building permits across our province totalled $1.26 billion in November, which was a nice 25 per cent jump over October. Both residential and non-residential permits increased month-over-month. However the longer-term perspective points in a different direction. The value of permits over the last 12 months totalled $13.3 billion, down from $14.6 billion in the previous 12 month period.

The graph below shows the breakdown of building permits between Alberta’s two major cities, and permits issued elsewhere. Over the last five years, the economic slowdown is evidenced with building permits drifting lower across the province. The drop is most pronounced in Calgary. In 2013 and 2014, total permits issued in that city averaged close to $600 million per month. That has fallen to approximately $400 million per month in more recent years.

Given the large volume of commercial real estate on the market in both major cities, a significant pull-back in non-residential building permits is expected in 2018. That will be partially offset by stable or slightly higher permits for government and institutional building projects (such as schools) as well as residential permits.

Building permits in Alberta, graph

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