Flaherty says encouraged on economy

Thu Jul 23, 2009 10:28am EDT
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By Frank Pingue

TORONTO (Reuters) - The latest economic news in Canada is more encouraging than it's been for the past few months and points to a country starting to pull out of recession, Finance Minister Jim Flaherty said on Thursday.

"Recent news economically is more encouraging than it's been in recent months," he said at an event in Toronto. "The indicators are that the economy has stabilized and that we're moving into a period of modest economic growth."

Economic reports that have topped expectations in recent weeks included one on Wednesday that showed Canadian retail sales rose by 1.2 percent in May from April, boosted by strength in the automotive sector and most other retail sectors.

Home sales have also been steadily improving.

"All of these are good indicators that the (government's economic action plan) is working and we're seeing the beginning of economic recovery," Flaherty said.

Earlier this week, the Bank of Canada offered a rosier economic forecast, and indicated that a rebound in business and consumer confidence and stimulative fiscal and monetary policies were among factors spurring growth in domestic demand. But it said the stronger Canadian dollar and restructuring of key industries were "significantly moderating the pace of overall growth".

(Writing by Ka Yan Ng and Jeffrey Hodgson; editing by Peter Galloway)