Building permits surged by a greater-than-expected 6.9% in October, more than offsetting the declines in the prior two months. The value of permits hit a new record of just over $4 billion in the month, and the 12-month total of $45.2 billion is about 12% higher than the prior peak in 1990.

BMO Nesbitt Burns reports that residential activity, which represents the bulk of the total, remained solid, rising 4.8%. On the non-residential side, institutional and government activity has been the driving force this year as businesses have cut back on major spending plans. However, industrial activity also contributed to October’s 10.9% increase in non-residential permits.

RBC Financial points out that the value of single family permits reached a record $1.9 billion in October, posting its third consecutive monthly increase. Construction intentions for the more volatile multi-family component also increased, up 4.1%. “Clearly, there are no signs of slippage for Canada’s housing market and, with housing demand remaining strong across the country, we expect next week’s housing starts release to easily sail past the 200,000 unit threshold once more.”

Canada’s help-wanted index declined for the fourth straight month in November, down 118 from 121 the month before. RBC says that despite the negative tone, “It is important to keep in mind, however, that this indicator has been notoriously bad at signalling the direction for the labour market of late since the HWI is based solely on advertisements in newspapers but does not include potential job ads that have proliferated across Internet sites. Other second-tier indicators have also been pointing towards a marginal slowdown for Canada’s job-making machine – notably hours worked, claims and payrolls. And, given the slower pace of economic growth foreseen in the near-term, we do expect that employment growth will also slow from its breakneck speed recorded earlier in the year.”

Nevertheless, Nesbitt predicts that this weak reading hints at a softer employment result tomorrow.

“The construction industry in Canada shows continued strength as still-low mortgage rates and solid income growth continue to support housing. As profits and capital spending continue to gradually recover, look for non-residential activity to find support in the coming year,” Nesbitt concludes.