WRAPUP 1-Canada factories, housing on steady growth track

* 1.7 pct growth in October factory sales beats estimates

* November home resales rise for fourth straight month

* October GDP seen growing after September contraction

* Home resales seen stable until rates rise

By Louise Egan and Ka Yan Ng

OTTAWA/TORONTO, Dec 15 (BestGrowthStock) – Canadian factory sales
grew faster than expected in October while the home resale
market appeared stable in November, setting the stage for
steady but tame economic growth in the final months of this
year.

Manufacturers’ sales rose 1.7 percent in October after
falling 0.5 percent in September, Statistics Canada said on
Wednesday. The result beat market forecasts for 1.1 percent
growth due to price-led strength in petroleum and coal products
as well as solid gains in primary metals and motor vehicles.

Manufacturers, hard hit by a strong Canadian dollar and
weak U.S. demand for their goods, have seen sales expand only
slowly since May following a rapid rebound in the previous 12
months.

Sales at the factory gate were up 9 percent in October from
a year earlier but were still well below the peak they hit in
2008 before the global financial crisis.

However, surging exports in October combined with the
manufacturing data suggest a return to economic growth in
October after a small contraction in September.

“As a result, we expect monthly GDP rebounded a solid 0.4
percent in October after the disappointing 0.1 percent dip in
September,” said Nathan Janzen, economist at Royal Bank of
Canada.

The performance is consistent with RBC’s updated outlook
for gross domestic product to rise 3.1 percent this year,
speeding up to 3.2 percent in 2011 and easing back to 3.1
percent in 2012. [ID:nN14295134]

The unenthusiastic growth in the latter half of this year
stopped the Bank of Canada in its tracks after it raised
interest rates three times earlier this year to 1 percent. The
bank held rates steady last week for the second time and is
seen staying on the sidelines until at least the second quarter
of next year, if not longer. [ID:nN07106511]

SOFT LANDING

Low borrowing costs have continued to be a key factor in
the renewed strength seen in the housing market. The sector
registered red-hot growth that powered the economic recovery in
its initial phase, before staging a fairly soft landing.

Data on November home resales released on Wednesday by the
Canadian Real Estate Association (CREA) suggested the sector
was returning to more normal levels.

The number of existing homes that changed hands in the
month rose 4.8 percent for a fourth consecutive monthly gain,
CREA said. Compared with November 2009, sales were down 9.3
percent. [ID:N15135081]

Policymakers have been fretting aloud this week that
Canadians are overextending themselves with mortgage debt due
to historic low interest rates. Finance Minister Jim Flaherty
said on Wednesday he was monitoring several factors.

“We look for stability in the (housing) market, we look for
continuing employment in the residential construction business
… And we look for affordability issues, and we watch ability
to pay issues, among others,” he told reporters.

Analysts said the likelihood that the Bank of Canada will
lift interest rates in the latter part of next year could
dampen home resale activity in 2011, as well as slow economic
growth.

“We expect home sales to remain well supported over the
next couple of quarters before increases in borrowing rates
eventually begin to ease the pace of sales,” said Pascal
Gauthier, senior economist at TD Bank.

CREA said the national average price in November rose to
C$344,268 ($342,555), up 2 percent from November last year.

($1=$1.004 Canadian)
(Reporting by Louise Egan, Howaida Sorour and Ka Yan Ng;
editing by Peter Galloway)

WRAPUP 1-Canada factories, housing on steady growth track