Most traders are awaiting the decision on interest rates by the U.S. Federal Reserve this afternoon, but there is a bit of economic data out in the meantime.

Economists had expected an increase in Canadian building permits for March, but they were disappointed by a sharp drop in permit activity. “Coming in wildly against consensus expectations for a 3.5% gain, building permits issued by municipalities across Canada fell by 4.4% in March,” notes RBC Financial.

RBC reports that residential permits were up 3.1%, while non-residential permits fell by 15.9%, “mostly due to the institutional component”, whereas commercial permits actually increased by 7.8%. “This is the second consecutive monthly decline after the steep 11.7% (revised) drop in the previous month. Much of this is a take-back effect from the surge in permits experienced in January. Calgary and Toronto drove increased demand for commercial space in the first quarter of 2003. Half of all census metropolitan areas in Canada recorded declines in building permits,” it says.

As for the Fed, RBC predicts, “We expect no change in rates, but the bigger debating point will be whether the Fed will communicate a reasonably clear bias to the conduct of monetary policy in coming months. Since its candid admission at last month’s meeting that the overall direction of risks in the U.S. economy was difficult to discern, we are expecting that Chairman Alan Greenspan will be more forthcoming by referencing the beneficial impact of recent developments on the drivers of growth. They include the end to the conflict in Iraq, a roughly US$14 drop in oil prices since the $40 intra-day trading peak in early March, the eye-popping surge in consumer confidence readings of late, strong stock market performance, and some early signs of stabilization in the services sector.”

http://www.statcan.ca/Daily/English/030506/d030506a.htm