OTTAWA (Reuters) - The value of Canadian building permits plunged from record highs to their lowest level in a year in February, but analysts were quick to caution against doomsday predictions of a sudden real estate collapse.
Statistics Canada reported on Wednesday a 22.4 percent tumble in permits due to a sharp decline in both residential and nonresidential permits.
The decline was more than three times the 6.5-percent drop forecast by analysts in a Reuters poll. The total value of permits was C$4.9 billion ($4.2 billion), 12 percent below the monthly average in 2006.
Demand for housing and nonresidential construction has been robust prior to February, driven largely by a booming economy in western Canada. In fact, the Bank of Canada sees rising housing prices as one of the main risks to its inflation outlook.
"It is important not to be looking at this number in isolation. Instead, previously strong numbers had set us up for this decline," said Stewart Hall, market strategist at HSBC, in a note to clients.
Analysts noted extremely cold temperatures in February, which might have impacted construction.
As usual, when economic news is bad, you can always blame the weather.
