Canadian housing starts were up 0.4 percent in June, beating expectations with an annual rate of 283,734 while the highest forecast in an Econoday survey was 270,000. The upside surprise was reinforced by an upward revision to May's estimate to 282,705 from 279,510.

The six-month trend was up 3.6 percent to an annual rate of 253,081.

Actual starts increased 14 percent year-over-year in centers with a population of 10,000 or more as a result of diverging trends. Among big cities, starts surged 74 percent in Vancouver, driven by multi-unit starts. By contrast, starts dropped 40 percent in Toronto and 8 percent in Montreal, all driven by multi-unit starts.

In June, construction employment increased 7,600, which could signal more activity ahead.

Starts are expected to retreat to 262.5K in June from 280K in May.

Released by the Canada Mortgage and Housing Corporation (CMHC), the monthly housing starts data capture the annualised number of new residential buildings that began construction during the previous month. Statistics are provided for urban and rural areas, the former with a population of at least 10,000. CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, a survey of these centres is conducted and the estimate revised.

Housing starts are a leading indicator of economic health because building construction produces a wide-reaching ripple effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. Home builders usually don't start a house unless they are fairly confident it will sell upon or before its completion. Changes in the rate of housing starts tell us a lot about demand for homes and the outlook for the construction industry. Furthermore, each time a new home is started, construction employment rises, and income will be pumped back into the economy.

Once the home is sold, it generates revenues for the home builder and a myriad of consumption opportunities for the buyer. Refrigerators, washers and dryers, furniture, and landscaping are just a few things new home buyers might spend money on, so the economic"ripple effect" can be substantial. Since the economic backdrop is the most pervasive influence on financial markets, housing starts have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the housing starts data carry valuable clues for the stocks of home builders, mortgage lenders, and home furnishings companies. Commodity prices such as lumber are also very sensitive to housing industry trends.