Stories Report on Business is following today:

Home construction picks up again

The market for new homes is beginning to show the same bounce that led to the remarkable recovery in resales after the slump. Canada Mortgage and Housing Corp. said this morning that housing starts in January jumped 5.8 per cent to a seasonally adjust annual rate of 186,300, with gains in both single homes and condominiums. The jump was led by a surge of almost 20 per cent, month over month, in British Columbia, which analysts said may have been related to construction for the Winter Olympics. Overall, it marked the fourth increase in a row.

“It appears that the new homes market is slowly coming back to life and may finally be benefiting from the resurgence in overall Canadian housing market activity,” said TD Securities economics strategist Millan Mulraine. “However, with part of the uptick in starts likely to be coming as a result of temporary factors, namely the surge in Olympic-related housing in B.C., we believe that this report overstates the true strength of the recovery in residential construction and expect to see a modest pullback next month.”

Added BMO Nesbitt Burns economist Robert Kavcic: “New home sales should taper off in July as buyers are jumping the HST gun in B.C. and Ontario, and those same buyers are also likely pulling forward some purchases given well-ingrained expectations of rate hikes in the second half of the year. Given that supply still has some catching up to do, housing starts should hold up around current levels through the remainder of 2010.”

This morning’s numbers are more fodder for those who have been warning about a housing bubble. Some economists have flagged the issue, and the chiefs of the major banks have also warned Ottawa it needs to dampen the mortgage market as prices surge. At the G7′s weekend meeting in Iqaluit, however, Finance Minister Jim Flaherty said he saw no evidence of a bubble.

Read

Canadian housing starts boom

Ottawa says housing bubble not a concern

Banks urge Ottawa to tighten mortgage rules

Canpotex strikes China deal

Canada’s major potash producers have struck a deal to sell 350,000 metric tons to China, but they left markets hanging by not specifying the price. Canpotex, the marketing and distribution organization owned by Potash Corp. of Saskatchewan POT-T , Agrium Inc. AGU-T and Mosaic Co. MOS-N , said in a statement this morning it struck a spot sale with China’s Sinofert “at competitive prices.”

“As a result of this latest spot sale, Canpotex is now fully committed on sales through the first quarter of 2010 and will announce plans with respect to second-quarter pricing early in March, after thoroughly reviewing the changing and much improved overseas potash market conditions,” it said.

Potash prices have been depressed as farmers held back, and markets have been watching for a deal with China. Last week, Belarusian Potash Co., or BPC, which accounts for about 30 per cent of the global market, boosted its standard grade price to $410 (U.S.) a tonne from $385 for major customers in Brazil and Asia.

Toyota preparing Prius recall?

Toyota Motor Corp. TM-N is poised to recall new Prius models, first in Japan and possibly as early as tomorrow, reports from Tokyo indicate. A recall in Japan, widely expected after troubles with 2010 Prius brake systems, would be followed by recalls in other countries such as the United States, Reuters and other news agencies said this morning. The Prius is Toyota’s prized hybrid, and was the best selling car in Japan last year. Toyota has suffered unprecedented troubles over the past two weeks, first with a recall of several popular models because of sticky gas pedals and then over reports of problems with Prius brakes. Last week, the company’s chief apologized and stressed the auto maker’s commitment to safety. The company has come under intense scrutiny from the U.S. government, in particular, and is scheduled to appear this week before the U.S. House Committee on Oversight and Government Reform.

Read

Toyota set to take action on Prius

Toyota counting on veteran at Congress hearing

Toyota stumbles but its ‘kaizen’ cult endures

Greek labour plans strike

As Greece scrambles to reassure world markets it is committed to its debt-fighting plan, organized labour is threatening a public sector walkout to fight the cutbacks. The public sector union ADEDY says it has planned a one-day strike for Wednesday, demanding pay hikes and a “fair” tax system. Greece’s tax system is considered erratic and leaky, and the government has vowed to fix it while freezing wages among the public sector. Greece is in a fiscal mess – its debt-to-GDP ratio is 12.7 per cent – which has troubled markets and led to fears of contagion. A public sector walkout could trouble markets even more. Read the story

India forecasts strong growth

India, one of the widely watched BRIC countries, projects economic growth of 7.2 per cent this fiscal year. It’s interesting to note that in the last fiscal year, growth of 6.7 per cent was the lowest in six years. The forecast today by the Central Statistical Organization added to speculation that the government could soon unveil measures to pull back from its emergency stimulus. Already, the country’s central bank has boosted the reserve requirements for commercial banks, meaning they will have less money to lend. India’s statistical agency forecast that manufacturing would expand 8.9 per cent, though agriculture will contract 0.2 per cent in the wake of a terrible monsoon season. India is the “I” of the fast-emerging BRIC economies, the others being Brazil, Russia and China.

Google part of China venture, report says

Google, which has threatened to pull out of China after a hacking attack and concerns over censorship, is part of a consortium in talks to invest in the country’s biggest digital bus ad company, the Reuters news agency reports. The initiative is being led by Walt Disney Co., and Google would be just a small partner. Read the story

Investment banking rebounds

Brokerages are rebounding from the deep financial crisis, a new report says. Investment banking fee revenue around the world recovered 12 per cent, hitting $66.3-billion (U.S.) last year, the report Monday by International Financial Services London said, but that was down by more than a fifth from the record fees of 2007.

“Equity underwriting, fixed income underwriting and mergers and acquisitions (M&A) advisory work each accounted for around a third of investment banks’ business in 2009,” said the report from the organization, which represents the British financial services sector. “Revenue from M&A advisory work, typically the main source of investment banks’ business, has fallen considerably since the start of the economic crisis. With less competition following the closure of a number of banks, some investment banks posted large profits in 2009 as they were not faced with trading losses and writedowns to the same extent as in the previous two years.”

The report added that the assets of the world’s biggest 1,000 banks rose 6.8 per cent in the 2008-2009 fiscal years to a record $96.4-trillion, though profits fell by 85 per cent to $115-billion.

From today’s Report on Business

Soured NYC deal portends property storm

G7 reaffirms commitment to bank reform

Ottawa refuses to release Globalive decision documents

There’s no GPS on this market road trip