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Building intentions continue to slide

Building intentions continue to slide

Posted on: 12/11/2018 | Author: ATB Financial's Economics + Research Team

​​Provincial building intentions continue to decline amid Alberta’s current economic backdrop. According to the latest building permit data, total permits valued $952 million in October. That’s 4.5 per cent lower than September’s total and is more than 5 per cent lower than October of last year. It’s also the lowest total in eight months.

Much of the decline in building permits has to do with the residential sector. Residential permits in October were $519 million, the lowest level in almost 2 years. Building permits are an excellent forward looking indicator for construction activity. The current slide is the result of both the supply of and demand for housing. In Alberta, there is an excess supply of housing. There are also fewer homebuyers given the rise of borrowing costs.

Non-residential permits are also trending lower. In October, non-residential intentions (commercial, industrial, and governmental buildings) reached $432 million. Much of this decline was felt in the industrial category (-33.6 per cent, month-over-month).

Weaker construction levels are a reflection of an economy struggling to gain traction. As a result, construction projects will stay muted over the next year.

Tomorrow, The Owl will focus in on rising housing supply levels in Edmonton and Calgary.

Building permits, graph

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