CANADA's economy presents a confusing numbers game.
Inflation is falling while interest rates are rising; unemployment is dropping but so is the Canadian dollar measured against foreign currencies, especially the American dollar.
For the average Canadian, this can make some decisions difficult. Take the mortgage market, where interest rates are rising.
``We've had a lot of calls from people who are nervous and want to switch from short-term mortgages to the longer term,'' says Joanne Leeder, a mortgage officer with Royal Trust in Toronto. In Canada, a ``long-term mortgage'' has a fixed rate for five years. ``They're afraid rates are going up and they want to lock in now.''
For about 60 percent of Canadians, the mortgage rate can change every six months when it is renewed. These homeowners hope that interest rates will be lower. The shorter-term mortgage carries a lower payment. In the last few years, choosing a six-month mortgage has been a wise decision, saving a lot of money.
Take a $100,000 (Canadian; US$73,490) mortgage with a 25-year amortization period. If it is taken for a five-year term at the current rate of 7.95 percent, it will cost $764 a month. Just two weeks ago, the rate was 7.25 percent and the payment $716.
Those who still think rates will stay near their current 30-year lows are taking out a mortgage with a six-month term, which costs only $625 a month.
``If you want to know where rates are going, just watch the Canadian dollar,'' one mortgage officer says.
Mortgage rates are going up because of pressure from the United States, economists hold. When US rates went up, Canada's had to follow. ``Rates have to be higher in Canada to attract foreign buyers'' of bonds and other Canadian debts, says Aron Gempel, vice president and economist at the Bank of Nova Scotia in Toronto.
Rates have also moved because the central bank, the Bank of Canada, is supporting the weaker dollar.
``Rates have moved up faster than expected,'' Mr. Gempel says. ``The new governor of the bank, Gordon Thiessen, had to move [rates up] because the Canadian dollar is under pressure.''
The Canadian dollar, which was at 80.22 cents a US dollar a year ago, is at about 73.40 this week. Just a month ago it was at 75 cents.
And why is the Canadian dollar under pressure? Foreign bond holders, especially the Japanese, have been selling their bonds because they are worried that a separatist party might win the Quebec election later this year. The separatist Parti Quebecois is ahead of the federalist Liberals by 3 points in the latest poll.
Investors are jumpy about the Canadian economy, even though real growth in output this year is expected to run about 3 percent, most of that coming from export growth. The domestic side of the economy is not growing, with high unemployment discouraging demand.
``The Canadian economy is slow compared to the United States because the consumer is not kicking in,'' Gempel says. ``Canadians are worried about losing their jobs.''
But the latest figures on unemployment show the rate is falling.
``Employment of both women and men has now surpassed pre-recessionary levels, with about 90 percent of the 94,000 jobs gained over the past seven months in full time work,'' notes Ted Carmichael, senior economist at Burns Fry Ltd. in a report on the latest jobless numbers.
Statistics Canada, a government agency, reported March 11 that the country's unemployment fell to 11.1 percent in February, down from 11.4 percent in January; 66,000 jobs were created in one month. Good news for Minister of Finance Paul Martin, who attended the Group of Seven ``Jobs'' summit in Detroit.
``I'm very encouraged,'' Mr. Martin said, ``particularly so since it has occurred in all regions of the country.''
But Gempel is not as impressed with the latest numbers. ``They are 170,000 behind the latest cyclical peak in 1990.''