Canadian housing starts showed surprising strength in May, as increased completions observed earlier in the year couldn't holdback momentum in multi-unit starts. Indeed, looking through the month-to-month volatility, continued momentum in the Canadian housing market suggests the impact of the Bank of Canada's January interest rate cut may be showing continued staying power, helped along by the late start to the building season on the back of a particularly cold winter.
The major surprise in the details is the strength in housing starts in oil-producing provinces, as Alberta, Saskatchewan, and Newfoundland and Labrador (+63.8%) all posted gains. This comes as May employment data (published last Friday) continued to show very modest impacts of lower oil prices on the labour markets of these provinces.
"Looking more broadly at Q2 2015, the housing sector continues to show surprising strength, and we expect it will contribute positively to real GDP growth as a result. However, looking to the second half of 2015, we believe H1 momentum in the housing sector isn't likely to continue, as housing market activity is expected to slow somewhat as the rest of the economy begins to pick up steam." said TD Economics in a report
