Bank of Canada faces domestic boom, staggering exports

Canada’s comparatively strong domestic economy and weak export-based industrial sector is presenting a quandary for the Bank of Canada as it prepares to weigh in on the surging dollar and its low-interest rate policy.

OTTAWA — Canada’s comparatively strong domestic economy and weak export-based industrial sector is presenting a quandary for the Bank of Canada as it prepares to weigh in on the surging dollar and its low-interest rate policy.

Two reports Thursday reinforced recent trends of a strengthening domestic economy propped up by floor-low interest rates and a recovering housing market, being undermined by a weak manufacturing base staggering from poor demand and a sky-high dollar

The most recent evidence is the outsized growth in house sales during the third quarter — given the still weak overall economy.

The Canadian Real Estate Association reported that in real terms, sales of existing homes in the country have never been stronger. The association said more than 135,000 units were sold in the July-to-September period — 18 per cent higher than the corresponding period last year before the recession hit.

Home sales were up in over 80 per cent of the local markets across the country as the average home price rose 11 per cent to $327,736.

“What it’s telling us is that low interest rates are working in Canada,” said CIBC chief economist Avery Shenfeld.

“We’ve had a number of disappointments on the export front. Where Canada is showing vigour, it’s on the domestic front in response to low interest rates.”

The hot resale housing market along with better new-home starts is also putting the central bank governors meeting on interest rate policy next Tuesday in a fix, says Douglas Porter, deputy chief economist with BMO Capital Markets.

“While the hot housing market cries out for rate hikes, the runaway loonie screams “No”!” he explained.

Lower rates in Canada will keep downward pressure on the Canadian dollar, while higher rates make it a more attractive currency for money traders.

The loonie cooled somewhat Thursday to below 97 cents US, but analysts expert it will reach parity by year’s end.

One respected U.S. analyst, Dennis Gartman, who was in Toronto, believes that once the loonie passes the greenback, it could stay above parity for “several years.”

Just Posted

Legalizing cannabis cost estimate for Red Deer just under $400k

Although the province of Alberta has announced $11.2 million for cannabis legalization,… Continue reading

WATCH: Every square tells a story: Edmonton expert is exploring Red Deer’s quilting history

Community members can bring in family heirloom quilts for documentation

Red Deer-area dads going through divorce are invited to Man Up

Support group formed to focus on positive activities, networking

WATCH: Two weeks away from Canadian Finals Rodeo in Red Deer

In just two weeks, Ponoka’s Shayna Weir will compete with the best… Continue reading

PHOTO: Say goodbye to City Hall Park flowers

A sure sign that winter is on its way is when City… Continue reading

PHOTO: Chew On This! campaign draws attention to national poverty

Lunch bags were being handed out in front of The Hub downtown… Continue reading

Wickenheiser, Pegula reflect NHL’s trend toward diversity

BUFFALO, N.Y. — With a laugh, Kim Pegula’s competitive nature kicked in… Continue reading

Harry and Meghan bring rain to drought-stricken Outback town

DUBBO, Australia — The Duke and Duchess of Sussex were jokingly thanked… Continue reading

TV Review: A Roseanne Barr-less ‘The Conners’ is a triumph

NEW YORK — Can there be a “Roseanne” without Roseanne? The answer… Continue reading

Canadian manufacturing sales fell 0.4 per cent in August: Statistics Canada

OTTAWA — Statistics Canada says manufacturing sales fell 0.4 per cent to… Continue reading

Brian Mulroney joins board of directors of New York-based pot company

NEW YORK — Former prime minister Brian Mulroney is joining the board… Continue reading

Canadians waking up to legalized cannabis: ‘My new dealer is the prime minister’

ST. JOHN’S, N.L. — Canadians across the country woke up to legalized… Continue reading

Most Read