MNI DATA REACT: Canada May Home Starts 194K, Above Forecast

By Greg Quinn

     OTTAWA (MNI) - Canadian housing starts climbed 16% to a 193,500 pace in

May, beating analyst expectations and another sign the economy is turning around

as some industries re-open following Covid-19 shutdowns.

     The gain beat the 160,000 pace in an MNI survey and is a rebound from

166,500 recorded in April, a month when the total was hurt by a shutdown of

construction in the province of Quebec.

     Single-family projects climbed 23% to 53,900 and multiple-unit work by 14%

to 139,500 according to a Canada Mortgage and Housing Corporation report Monday

from Ottawa.

     The figures are another indication of recovery in Canada following a

surprise employment gain in May that Statistics Canada reported Friday. With

more local governments opening up in June, it sets the stage for GDP to resume

growth again in the third quarter as the central bank predicts. 

     Still, the six-month moving average of starts, used by CMHC as a more

stable indicator, declined to 196,800 in May, down from a recent peak of more

than 215,000. 

     "The headline print almost certainly overstates the underlying trend in

Canada's housing market, which is facing a number of headwinds from reduced

immigration, curtailed short-term rental activity, and newly unveiled measures

from CMHC to tighten lending standards," CIBC economist Royce Mendes wrote in a

research note. 

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

[TOPICS: MACDS$,M$C$$$]