WRAPUP 1-Latest Canada data confirm recovery picking up

* Canada trade surplus climbs on healthy exports

* Many dealers expect rate hikes starting in July

By David Ljunggren

OTTAWA, April 13 (BestGrowthStock) – Stronger-than-expected trade
figures for February and a steady housing market confirm the
Canadian economic recovery is picking up speed ahead of
expected interest rate hikes by the Bank of Canada.

The trade surplus hit C$1.4 billion ($1.4 billion) in
February on increased exports of industrial goods and
materials, Statistics Canada said on Tuesday. Analysts had
predicted a surplus of C$600 million.

Government ministers say that while they are encouraged by
recent data, it is too soon to say the recovery has fully taken
hold. High unemployment is a particular concern for Ottawa,
which also has an eye on the strong Canadian dollar. [CAD/]

The Bank of Canada has promised to keep rates at record
lows at least until the end of June as long as inflation
remains under control. Most of Canada’s primary securities
dealers expect the central bank to start hiking rates in July
or sooner. [CA/POLL] (BOCWATCH: )

“This continued improvement in domestic demand, along with
indications of sustained improvement in labor markets, is
expected to prompt the Bank of Canada to begin withdrawing
current highly stimulative monetary conditions,” said Nathan
Janzen at RBC Economics.

“However, the still large amount of economic slack left
over from the recent recession is expected to keep a lid on
inflation in the near term allowing the pace of tightening to
remain moderate.”

Some economists speculate that the strong Canadian dollar
will dampen inflation, which could push back rate hikes or
ensure moves are done in small increments.

February was the fifth consecutive month Canada posted a
trade surplus. Exports grew by 2.8 percent on the back of a 7.2
percent leap in the value of industrial goods and materials.

“These are strong trade figures that over-shot expectations
and they should mollify concerns that a strong Canadian dollar
could keep the (Bank) sidelined,” said Derek Holt and Karen
Cordes Woods of Scotia Capital Economics. The central bank’s
next fixed-date rates announcement is on April 20.

The Canadian dollar slipped slightly after the figures were
released and by 10:35 a.m. (1435 GMT) it was at C$1.0060 to the
U.S. dollar, or 99.40 U.S. cents, compared to C$1.0029 to the
U.S. dollar, or 99.71 U.S. cents, just before.

Statscan also said the price of new homes grew by 0.1
percent in February from January and by 0.9 percent from
February 2009. [CAHPRI=ECI]

The Toronto and Oshawa region, which accounts for a third
of the overall index, recorded a 0.7 percent decline. Statscan
said this was partly due to the fact that some builders in the
region were keeping prices stable despite an increase in taxes,
which had the effect of cutting the value of houses.

Market analysts had on average expected new housing prices
to grow by 0.4 percent.

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(Reporting by David Ljunggren; Editing by Jeffrey Hodgson)

WRAPUP 1-Latest Canada data confirm recovery picking up