Canadian municipalities issued $5.4 billion worth of building permits in May, up 6.9% from April, Statistics Canada said today.

May’s increase was driven mainly by activity in the non-residential sector, the government agency said.

The showing was much stronger than the 1.3% rise economists had expected.

“The housing sector continued to be boosted by advantageous mortgage rates, although they have increased progressively over the last year,” the agency said in a release.

“The high level of full-time employment, combined with strong gains in disposable income, also had a positive impact on the demand for new housing.”

It was the sixth straight month of building permit activity above $5 billion and was the third-highest level on record, surpassed only by December and March.

Contractors took out $2.1 billion in permits for non-residential projects, up 18.1% following a 19.5% decline in April.

The value of housing permits edged up 0.7% to $3.3 billion.

The agency said the largest dollar gain provincially in the housing sector was in Ontario and in Quebec.

The largest dollar retreat in May was in Alberta, down 10.8%, with declines in both the single-and multi-family components.