The value of building permits plunged by 11.4% in July, with both the residential and nonresidential sectors declining, Statistics Canada said Tuesday.

The federal agency said the value of building permits issued in July fell to $4.8 billion from the record $5.4 billion set in June, with residential and non-residential sectors off 10.3% and 13.3%, respectively.

But economists noted the July figure was still the second highest month to date.

“While the top line figures may make for gloomy headlines, it is very important to keep in mind that the previous month was an all-time record and that July’s permits were the second highest on record,” said RBC Financial Group assistant chief economist Derek Holt.

“Furthermore, permits data can be highly volatile especially concerning big-ticket multi-family/condo, commercial, and institutional projects. Indeed, if there is anything surprising about this morning’s update, it lies in the fact that the decline was not bigger after the massive surge the previous month, such that the smoothed trend in overall permits remains pointed sharply upward.”

Holt noted in a report that multi-family permits dropped by 29% vs the previous month — still the third best figure on record, although it was responsible for all of the decline in the residential component since permits for single-family dwellings were actually up by 2% to a new record high. “Once again, keep in mind that condo projects in particular can add a lot of volatility to the data so one month’s decline does not make a trend,” he said.

In the nonresidential sector, commercial and industrial permits were down by 29% and 1.6%, respectively. StatsCan says that lower demand for recreational projects, trade and services buildings, and the mining/agriculture sector in British Columbia were the biggest sources of this decline. Institutional projects, however, were lifted by an 11.6% gain in permits.

StatsCan said that on a year-to-date basis, the residential sector’s strength drove the overall value of building permits for the first seven months of 2004 up 8.6% to $31.9 billion. Builders took out $21.2 billion worth of residential permits between January and July, up 18.3% from the same period in 2003. Non-residential permits fell 6.7% to $10.7 billion.