Source: The Canadian Press

The value of Canadian building permits issued in August tumbled 9.2% compared with the previous month as contractors pulled back more than expected in the non-residential sector.

Statistics Canada reported Thursday that contractors took out $5.7 billion in building permits overall for the month, with the downturn in the non-residential sector outweighing an increase in the residential sector.

“It was a surprisingly large drop,” said Doug Porter, a Bank of Montreal economist.

“Of course, building permits are arguably the most volatile economic report that Statistics Canada releases, so you obviously have to treat it with a little bit of caution — especially permits in the non-residential sector, which can be extremely lumpy,” Porter said.

The total value of building permits increased in five provinces: New Brunswick, British Columbia, Newfoundland and Labrador, Manitoba and Saskatchewan. It was down in five others, with the largest decreases coming in Ontario and Alberta.

After four months of decline, the value of residential sector permits issued by municipalities increased 2% to $3.5 billion in August.

At the same time, they issued just $2.2 billion worth of non-residential permits, down 22.9% from July as building intentions declined in all three components of the non-residential sector in August.

The value of permits in the institutional component fell 38.9% to $705 million in August after two straight monthly increases that brought the level to a new high.

In the commercial component, municipalities issued permits worth $1.1 billion, down 12.2% from July, while industrial intentions fell 11.5% to $369 million, the third straight monthly decline.

Porter said the monthly results show that building permits appear to be over their peak.

“In the residential side we’ve had all kinds of evidence that the housing market has lost momentum, and so even though residential permits were up a bit in August, it does look like they are starting to soften on a trend basis,” he said.

Municipalities issued $1.5 billion worth of permits for multi-family dwellings in August, up 12.9% from July and the highest value since July 2008. The value of single-family permits decreased 4.9% to $2 billion.

Municipalities approved the construction of 16,764 new dwellings in August, down 0.3% from July.

Statistics Canada said a 10.8% decrease in the number of single-family dwellings, which totalled 6,488, more than offset a 7.7% increase in the number of multi-family dwellings, which totalled 10,276.

Further insight into the economy will be released Friday with the arrival of the September jobs reports on both sides of the border, as well as housing data from the Canada Mortgage and Housing Corp.

The Bank of Canada is also slated to release its quarterly business outlook survey.