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Energizer Holdings Inc., the Town and Country-based seller of batteries, sunscreen, razors and feminine products, warned of a choppy business outlook on Tuesday when it reported a drop in third-quarter sales. The company also announced a plan to trim overhead costs and slim its manufacturing and sales operations.

The plan will combine voluntary enhanced retirement severance packages with involuntary layoffs. The costs of the restructuring are expected to be in the range of $22 million to $28 million.

Energizer didn’t disclose how many jobs it hopes to trim. The company employs more than 5,200 in the United States as of Sept. 30.

In the third quarter ended June 30, Energizer’s profits were $73 million, or $1.13 a share, versus $66.7 million, or $1.13 a share, in the third fiscal quarter of 2008. A stock offering in May increased the number of outstanding shares, causing earnings per share to remain unchanged.

Net sales fell 6 percent to $998 million.

Ward Klein, Energizer’s chief executive, said the company’s sales and earnings continue to hold up despite a tough economic environment. But he acknowledged "shortfalls" in the company’s battery business, negative effects from currency exchange rates and a "globally weak consumer environment." Energizer said it expects a difficult fourth quarter.

"Longer-term, we need to insure our cost structure remains aligned to the difficult consumer and macro-economic environment that prevails, while maintaining our investment in existing brands and new products," Klein said in a statement cheap business cards.

"It’s been a very difficult nine months for them," said Morningstar analyst Lauren DeSanto. Consumers and retailers are pulling back on spending, and foreign currency exchange rates have at times taken unhelpful turns.

Still, analysts said they were encouraged by Energizer’s results. The stock bumped up 3.4 percent in Tuesday’s trading on the New York Stock Exchange.

"Overall, we were pleased with the quarter," wrote Bill Chappell, an analyst with SunTrust Robinson Humphrey. For one thing, the decline in the battery business was expected, and even in the midst of a decline Energizer was able to hold or grow its market share in most territories.

The bright spot, Chappell wrote, was Energizer’s personal care segment, which saw sales grow five percent, not counting currency fluctuations. Skin, infant and feminine care products led the way.

"It is encouraging to see these businesses finally all post top-line growth," Chappell wrote.

DeSanto concurred, saying Energizer would be in a "much more difficult position" without its 2007 acquisition of Playtex Products, which included feminine products, baby items and sunscreen.

"To see the personal care side holding up as well as it did, that’s good to see."

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OTTAWA – The number of Canadians receiving regular Employment Insurance benefits in May hit its highest level since 1997, with Alberta and Ontario showing the most pronounced spikes as their economies were squeezed by job losses linked to the slumping manufacturing sector and weak prices for oil and natural gas.

Statistics Canada said today that the EI roll swelled to 778,700, a 9.2 per cent increase from April's figures. Since the recession took hold in October of last year, the number of recipients has grown by 278,300, or 55.6 per cent.

Ontario has seen a big jump in jobs lost in its blue-collar industries — from auto and mining to forestry — because of slumping demand from the United States, the impact of the global credit crunch and falling prices for minerals and other commodities.

In Alberta, whose energy-centred economy has been hit hard by dramatic drops in oil and natural gas prices, there were 57,000 regular EI beneficiaries in May, a nearly 17 per cent rise.

"There's no way around it. Alberta's labour market has softened considerably over the past year," said Todd Hirsch, senior economist with ATB Financial in Calgary, a major provincial Crown-owned lender formerly known as Alberta Treasury Branches.

However, Hirsch noted that the surge in Alberta's EI claims rose so dramatically because they had nowhere to go but up.

"It's jumped up tremendously since last year. But it's because we were starting at such a ridiculously low level," he said.

Just a year ago, Alberta had an extremely tight labour pool, with businesses so desperate for workers that they recruited from across Canada and overseas.

But since markets began to tank in October of last year, the number of Albertans on EI has risen each month, for a total increase of 38,800 advance payday loans.

The unemployment rate ballooned from a slim 3.7 per cent to 6.6 per cent. That's still well below the national rate in May of 8.4 per cent.

Ontario, where scores of jobs have been lost as General Motors (NYSE: GM) and Chrysler restructured with billions of dollars in government aid, the number of regular EI beneficiaries increased by 16 per cent to 274,100 between April and May.

April to May, the number of EI recipients grew by 6.2 per cent in British Columbia and 5.8 per cent in Saskatchewan, which has the lowest unemployment rate in the country

Since last October, the Atlantic provinces, Quebec, and Manitoba have posted smaller increases than the national average of 55.6 per cent.

The rising tide of jobless workers has led the Liberal opposition to put pressure on the federal Conservative government to liberalize jobless claims rules to allow more workers to claim benefits.

The two parties are in talks on proposed EI changes and some are expected by the end of the year.

Today's EI figures show the system is "responding to the realities of the global recession," said Dimitri Soudas, a spokesman for Prime Minister Stephen Harper.

Soudas said the Conservative government's measures to deal with the economic downturn include: providing an extra five weeks of EI for workers who have lost their jobs; investing $8.3 billion in skills training; expanding the work-sharing program and spending money on infrastructure.

"Our Conservative government has taken action to support those hardest hit and help unemployed Canadians get back into the work force," Soudas said.

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The federal government does not plan to intervene in Nortel Network Corp.'s sale of its key wireless unit to Sweden-based Ericsson until the deal has been reviewed by U.S. and Canadian courts next week, a spokesperson for Industry Minister Tony Clement said today.

“It would be inappropriate to speculate on this issue while it is still being reviewed by the courts,” press secretary Laryssa Waler wrote in an email to the Star. “Because it's before the courts, I can't comment further.”

The $1.13 billion (U.S.) deal will be reviewed on July 28.

But New Democrat MP Paul Dewar called this attitude irresponsible and said the Conservatives were “sitting on the sidelines.”

“This do-nothing approach by the Conservatives when it comes to jobs needs to be put to an end,” he said in a phone interview today. “They're waiting for what the courts say, but they should have been at the table (during bankruptcy proceedings). It's astonishing they didn't take the option of having representation at the table.”

Dewar, whose riding in Ottawa Centre encompasses many Nortel employees, said it was the federal government's lack of attention to the floundering company that “let it get away.”

“It didn't have to be this way. Nortel was the premier telecommunications company not too long ago,” he said. “It should have been Nortel acquiring Ericsson – not the other way around.”

Liberal Industry, Science and Technology critic Marc Garneau said he agreed Nortel's announcement Saturday makes it “a sad day for Canadians,” but there does not appear to be grounds for Ottawa to step in at this point.

“Obviously, as a Canadian, it hurts and it's a pity this is happening. But once you get past the emotional part of it, the fact is (Nortel) has been in bankruptcy protection for the past six months … Something was wrong,” he said. “If we want to play in the big leagues, we have to play by international rules … (And) it appears everything did go according to the rules established.”

Garneau, MP for Westmount-Ville-Marie, said everything in Nortel's bankruptcy protection proceedings seemed to follow regulations despite BlackBerry-creator Research in Motion Ltd.'s claim it had been blocked from bidding in the auction.

“I have no basis to say RIM was excluded. I'm assuming RIM could've bid if it complied with payday loan no faxing… the rules,” he said. “I have no evidence to say anything unfair occurred.”

Garneau added Clement's inaction when Nortel approached the government months ago resulted in the tragic outcome for Canada's largest high-tech research and development investor. “Because nothing was done, events took their course.”

The Swedish telecom equipment giant's winning bid beat out Europe's Nokia Siemens Network and a U.S. private equity firm for the unit, Nortel announced early today. RIM says it would have bid $1.1 billion if allowed to join the auction.

Nortel has said at least 2,500 employees will be offered jobs at Ericsson.

Garneau said he hopes this is the case. “Hopefully, these jobs will be (offered). They're high-tech jobs. They're very qualified people.”

The government would review the deal if national security was at stake, the Liberal industry critic said, but he has yet to see any evidence the sale involves sensitive intellectual property being handed over to Ericsson.

Last year, Ottawa blocked MacDonald Dettwiler and Associates Ltd. from selling its sensitive satellite and robotics technology to American rocket-maker, Alliant Techsystems Inc., for $1.3 billion.

But that was a different case from Nortel, Garneau said. “If Nortel were providing the Canadian government with some (technology) that was classified for Canadian defence or security purposes … that (was) going to be turned over to Ericsson, then there would be an argument.”

Dewar, on the hand, said investment review should be based on the overall effect on the country – not just national security.

The Macdonald Dettwiler and Associates Ltd. case was the only time Ottawa intervened in a deal using the Investment Canada Act, which outlines the legal guidelines non-Canadian investors are required to follow, the New Democrat MP said.

“Our investment review should be strengthened. What's the net benefit to Canada? That's what we should be looking at here. It shouldn't be just around security. (The Nortel-Ericsson) deal should be reviewed and looked at very closely,” he said. “(The act) is a joke. It's a paper tiger.”

With files from Chris Sorensen.

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Kellwood Co., a leading apparel maker based in Town and Country, said Thursday it has completed a crucial bond exchange that had appeared to unravel earlier this month.

The deal to exchange new senior secured notes due in 2014 for existing senior notes that matured July 15 betters Kellwood’s financial standing, the company said. Objections this month by Deutsche Bank, Kellwood’s biggest bondholder, had threatened to derail the agreement between the company and the other bondholders to exchange $140 million in bonds.

The Wall Street Journal reported two weeks ago that Kellwood faced the possibility of bankruptcy if the exchange offer failed.

"I am very pleased that Deutsche Bank and the other bondholders accepted Kellwood’s exchange offer," said Michael W. Kramer, Kellwood’s president and chief executive. "The conclusion of this transaction not only creates a better deal for our bondholders, the exchange into new notes with a maturity in 2014 strengthens our financial position."

Kramer said the agreement assures Kellwood, the maker of Phat Farm, Sag Harbor and other clothing brands, "full access to our $175 million credit facility life insurance."

Kellwood was a publicly traded company until February 2008, when it was purchased for $542 million by Sun Capital Partners, a private equity fund based in Boca Raton, Fla. Kellwood employs about 2,000 people, including 175 executives and other workers in St. Louis.

Once primarily known for Sag Harbor and other moderately priced labels, Kellwood has been restructuring to cut costs and build its higher-priced clothing business.

The company raised cash in November by sellling its Gerber Childrenswear and Hanna Andersson businesses to an affiliate of Sun Capital for $179 million. Kellwood said at the time it would use about $145 million from the spinoff sale to pay down debt.

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Analysts and observers are scrambling to make sense of BlackBerry-maker Research In Motion Ltd.’s sudden interest in paying as much as $1.1 billion (US) for the wireless division of Nortel Networks Corp., which is operating under bankruptcy protection.

RIM said late yesterday that it had attempted to bid on the unit, which supplies equipment to wireless carriers using the increasingly out-of-favour CDMA standard, but was blocked from doing so by Nortel and its court-appointed monitor.

While the CDMA equipment business is a waning segment and does not initially appear to be a good fit with RIM’s focus on building wireless handsets, observers suggested today that RIM is likely motivated by Nortel’s technology patents relating to fourth-generation wireless networks, dubbed Long Term Evolution, or LTE.

LTE, which is currently undergoing trials, promises to offer wireless subscribers a mobile broadband experience that is similar to what they currently experience on their desktop computers.

It’s also expected to allow mainly North American carriers who now use the CDMA standard — Verizon Wireless in the United States and Bell Canada Inc. and Telus Corp. in Canada — to migrate to a common global standard alongside carriers such as AT&T Inc. and Rogers Communications Inc. that use the increasingly dominant GSM platform.

"RIM is highly exposed to North America and needs to migrate with its customers to next-generation networks," said Kevin Restivo, an analyst at IDC Canada.

"Having those patents and the people to develop those networks is invaluable."

Nokia Siemens Networks, a joint venture between Finnish handset maker Nokia Corp. and Germany’s Siemens AG, has already bid $650 million for the same division in a bid to gain a foothold in the North American market.

The deadline for submitting competing bids for Nortel’s wireless unit is 4 p.m. today.

RIM said it sought to be a qualified bidder in the process, but was told "it could be qualified only if it promised not to submit offers for other Nortel assets for a period of one year."

The Waterloo-based tech giant suggested that a sale of Nortel’s wireless business to a foreign company could "adversely affect national interests with potential national security implications 500 fast cash."

Analysts suggested it could be a shrewd 11th-hour negotiating tactic.

"RIM is effectively appealing to the Canadian government to intervene in the bid process," said Deepak Chopra, an analyst at Genuity Capital Markets, in a note to clients today.

Nortel said in a statement it is "disappointed that RIM has decided to issue a press release relating to the scheduled auction for Nortel’s CDMA and LTE assets."

Other prospective bidders "moved expeditiously to comply with the court approved procedures to become a qualified bidder," for the wireless operations, Nortel said.

"It was not until July 15, 2009 that RIM submitted a letter asking to be a qualified bidder and since that time, Nortel has diligently attempted to work with RIM on acceptable confidentiality terms relating to Nortel’s valuable intellectual property assets, but RIM refused to comply with the court approved procedures," Nortel said, adding that it remains willing to provide RIM with the opportunity to participate in the auction.

For its part, the Canadian government doesn’t appear to want to wade into the issue.

"I am aware of the discussions between Nortel and RIM. My officials and I are following this closely," said a statement by Industry minister Tony Clement.

"Nortel is currently under court ordered bankruptcy protection, as such any proposed sale of the assets of the company must be approved by the Judge in charge.

"As Nortel is in bankruptcy protection, the Government of Canada does not have a say how the Judge rules on any proposed sale of Nortel assets."

Nortel, once Canada’s top technology company, has been operating under bankruptcy protection since January.

While CEO Mike Zafirovski initially said the goal was to restructure the company, Nortel has since abandoned the approach and is now in the process of selling off its major assets to the highest bidders.

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MOSCOW–GM gets three offers for Opel

General Motors said today that it had received three binding takeover offers for Opel that it would consider together with the European countries that would be affected by the deal.

In a surprise move, the once heavily favoured consortium of Magna and Sberbank changed its plans at the last minute and agreed that they would evenly split a stake in Opel, in a concession to critics, a source with knowledge of the matter told Reuters.

"The final bids as well as GM's preliminary findings will then be reviewed with the German and other impacted governments, the EU Commission and the Opel/Vauxhall Trust Board," GM Europe said in a statement released after the deadline for submissions, without naming the bidders.

Berlin is expected to have a large say in the decision, since it would provide the bulk of up to 4.5 billion euros ($6.4 billion) in expected loan guarantees for Opel.

Earlier, Magna and Brussels-based private equity firm RHJ International said they would submit final bids, while a source familiar with the matter told Reuters that China's Beijing Automotive (BAIC) also delivered a binding offer for Opel and its UK sister brand Vauxhall.

Magna and Russian partner Sberbank now aim to each take a 27.5 percent stake in Opel. Magna, a auto parts maker from Aurora, Canada, originally planned to take just 20 percent, with the Kremlin-backed lender holding the remaining 35 percent.

"It's a compromise to those people that wanted more Magna in the consortium," the person with knowledge of the matter said.

The change could help soothe concerns in Germany over the the potential influence of the Russian bank, which weeks ago began to talk about selling the possible stakeholding in Opel to a domestic carmaker.

A debilitating stalemate between GM and Germany could be emerging over their differing preferences for the two competing bids, in which RHJ foresees shrinking Opel's production footprint to a more manageable level while Magna targets growth in the dynamic, but volatile, Russian market.

"Then (if there is disagreement between GM and Germany) we naturally have a problem and it becomes really complicated," said a source familiar with the thinking of Opel's trustees.

The trustees must formally approve any sale, and Germany and GM are evenly represented in the group.

Magna wants to convince the German federal and state governments that its plan best guarantees Opel its long-term independence from GM and ensures the European carmaker can decide for itself on issues including where it would develop new vehicle architectures or key modules and components.

Before approving the offer, Magna's board called explicitly for a legally separate holding to manage its stake in Opel in order to head off concerns that know-how developed together with rival carmakers could end up being intentionally leaked to Opel compare car insurance rates.

RHJ, meanwhile, said in a letter to Premier Juergen Ruettgers of North Rhine-Westphalia, home to Opel's Bochum plant, that while it would eliminate 3.900 jobs by 2014, including 2,200 in his state, it did not foresee any compulsory layoffs in Germany.

GM needs to give up a majority stake in Opel in order for the Ruesselsheim-based carmaker to qualify for billions in state aid, but a faction within GM clearly favours a deal with RHJ that could see the U.S. company reacquiring its lost holding when RHJ exits its investment at a later date.

RHJ, a Belgian-listed company that was originally called Ripplewood Holdings Japan and which still has loose ties to the U.S. private equity firm, confirmed today that it would submit a "compelling" offer. The latest plans indicated that it would offer 275 million euros in equity for a 50.1 percent stake.

Magna stuck to its offer of 100 million euros in cash and another 400 million in loans to Opel convertible into equity – likely split up evenly with consortium partner Sberbank.

Although Sberbank would be expected to pool its votes with Magna to ensure majority control, GM would technically remain the largest single shareholder with a 35 percent stake. Opel staff would receive the other 10 percent as under RHJ's plan.

Opel labour leader and deputy chairman Klaus Franz and powerful German union IG Metall are mobilising opposition against RHJ's offer.

Unlike Magna, the Belgian firm has not visited a single Opel plant to conduct their own analysis and is basing its concept solely on GM's restructuring plan, Franz said.

"A job reduction of about 500 engineers is planned which could lead to the relocation of one major Opel European project to the U.S. We are also endangered by losing capability and responsibility in Powertrain," Franz said in a letter to staff that was seen by Reuters.

"Contrary to that Magna is planning additional models and a new 'A' (small car) architecture."

Franz told Reuters that GM wants also to claim licensing fees for example on development work for a fuel-saving dual clutch transmission although GM doesn't offer the technology.

The labour leader, who believes GM would run things under a deal with RHJ, played a critical role in scuppering any political support for Fiat's Opel bid and has thrown his entire weight and credibility behind Magna.

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OTTAWA–Industry Minister Tony Clement says he’s taking U.S. Steel to court over its acquisition of Stelco Inc. in order to show foreign takeover bidders that Ottawa is serious about protecting Canadian interests.

Clement, who oversees foreign buyouts, announced yesterday that he is going to the Federal Court of Canada to make U.S. Steel live up to promises it gave Ottawa in 2007.

It is the first time the federal government has taken legal action to force a company to meet its promises under the 1985 Investment Canada Act.

Ottawa wants the court to order U.S. Steel to comply with commitments it made on production, research and development and investment, in exchange for being allowed to acquire Stelco in Hamilton.

The government is seeking a fine of up to $10,000 a day for every day the court rules the company is not in compliance, Clement said.

Despite the promises U.S. Steel made to Ottawa, in March the company temporarily shut down most of its production at two large former Stelco operations in Ontario, leaving the future of hundreds of employees up in the air.

Clement said Ottawa can’t just "roll over" and ignore the commitments made by takeover bidders.

"If I let these things go, quite frankly, it will be open season for other potential foreign investors to think that they can make promises and then break those promises," he told the Toronto Star.

"Every company that invests in Canada, if they make a promise to Canadians and to the government of Canada, they have to keep that promise."

Clement said U.S. Steel is not meeting the commitments it made to Ottawa.

"I remain of the view that U.S. Steel is not complying with its undertakings, and I am not satisfied by its explanations for non-compliance," he said guaranteed payday loans.

Clement’s action is a change of direction for the Conservative government on the issue of foreign takeovers. In 2006 and 2007, the Harper government was criticized for presiding over a wave of buyouts that saw many of the country’s corporate mainstays – including the bulk of the steel industry – fall under foreign ownership.

"The Conservative record was one of rubber-stamping all of those takeovers," United Steelworkers economist Erin Weir said.

"So, I think perhaps now the government does feel a bit uncomfortable, it does feel some obligation to enforce the commitments made as part of those takeover." .

U.S. Steel took sharp issue with Clement’s decision.

"We are disappointed that the minister has apparently decided to pursue the matter in the courts while ignoring our numerous requests to meet with him on these issues and while disregarding the ministry’s own guidelines with respect to foreign investment," said James Garraux, a senior vice-president and general counsel at U.S. Steel.

"We will vigorously defend our record at U.S. Steel Canada in the appropriate forum," Garraux added.

A U.S. Steel spokesperson was unable to explain what Garraux meant when he said Clement was ignoring Canadian government guidelines.

Clement said he had met with U.S. Steel and exchanged correspondence with the company.

But Clement said the company tried in its correspondence to present legal positions "basically changing the deal" it had struck with the federal government two years ago.

Clement said the company’s statements yesterday were "all a distraction" from the issue of compliance.

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Confidence among U.S. house builders rose this month to the highest since September as sales of single-family units increased and more prospective buyers expressed interest.

The National Association of Home Builders/Wells Fargo index of builder confidence rose to 17 this month from 15 in June, the Washington-based NAHB said Thursday. A reading below 50 means most respondents view conditions as poor.

Lower house prices and tax credits have helped the housing industry stabilize after almost four years of decline. Combined sales of existing and new houses climbed to a 5.1 million annual pace in May, the highest level so far this year. Economists are incorporating an easing in the housing slump in their forecasts of an economic recovery in the second half of 2009.

"Builders are seeing slightly better sales conditions this month as consumers take advantage of the first-time buyer tax credit, low interest rates and attractive home prices," NAHB Chairman Joe Robson said in a statement. At the same time, he said, "many remain quite concerned" about competing with foreclosed properties and a lack of available credit for some potential buyers.
The builder confidence index was forecast to increase to 16 this month, according to the median estimate of 46 economists surveyed by Bloomberg News. The gauge, which fell to a record low of 8 in January, averaged 16 in 2008 payday loans. It was first published in January 1985.

The survey asks builders to characterize current sales as "good," "fair" or "poor" and to gauge prospective buyer traffic. It also asks participants to assess the outlook for the next six months.

The builder group’s index of current single-family house sales rose to 17, the highest since September, from 14 last month. The gauge of buyer traffic increased to 14, also the highest since September, after holding at 13 for three months. A measure of sales expectations for the next six months held at 26 for a second month, after readings of 27 in May and 24 in April.

"The component gauging sales expectations for the next six months remained virtually flat for a fourth consecutive month," David Crowe, chief economist at NAHB, said in a statement. "Builders recognize the recovery is going to be a slow one and that we are facing a number of substantial negative forces."

Confidence increased in one of the four regions, rising to 20 in the South from 15 in June. It held steady at 15 in the West and at 14 in the Midwest, falling to 16 from 19 in the Northeast.

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The Federal Reserve expects the economy this year will sink at a slower pace than it previously thought, but that unemployment will top 10 percent and remain high for the next few years, according to a new forecast released Wednesday.

The Fed now predicts the economy will shrink between 1 and 1.5 percent this year, an improvement from its forecast issued in May, when the Fed projected the economy would contract between 1.3 and 2 percent.

The upgrade comes from the expectation that the economy’s downhill slide in the first half of 2009 wasn’t as bad as previously thought. The Fed said the economy should start growing again in the second half of this year, although the pace is likely to be plodding.

In fact, most Fed policymakers said it could take "five or six years" for the economy and the labor market to get back on a path of full health in the long term. And most officials saw "the economy as still quite weak and vulnerable to further adverse shocks."
Against that backdrop, the Fed’s forecast for unemployment this year worsened individual health insurance plans. The central bank predicted the jobless rate could rise as high as 10.1 percent, compared with the previous forecast of 9.6 percent.

For 2010, the Fed predicted the economy would grow between 2.1 and 3.3 percent. That’s a slight upgrade from its old forecast of between 2 and 3 percent.

Still, it would mark a slow recovery and that will keep unemployment elevated well into 2011, the Fed said. Companies won’t be in any mood to ramp up hiring until they are certain that any recovery has staying power. Some Fed officials predicted the jobless rate could hover in the 8 percent range or as high as 9.2 percent in 2011.

On the inflation front, Fed policymakers bumped up their forecasts. The Fed expects inflation to rise between 1 and 1.4 percent in 2009 and between 1.2 and 1.8 percent next year.

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John Cocomile can’t seem to walk a few steps before his BlackBerry starts to buzz. It’s another client trying to close on a home purchase.

"It has been like this for the last couple months," says Cocomile, a mortgage broker and owner of popular website greedymortgage.com. "Real estate agents are normally on holiday in the summer, so everyone expected things to slow down. But, good gosh, stuff is really selling out there."

He’s right. Canadian existing homes sales soared in June, up 17.9 per cent year over year to 54,416 units, according to the Canadian Real Estate Association in a report released yesterday

The national average sale price also reached new heights on a monthly basis, climbing 3.6 per cent year over year to $326,613.

On a quarterly basis, sales in the second quarter were up 1.4 per cent, marking the first year-over-year increase in such activity since 2007.

The solid numbers beat consensus estimates by analysts and took some market watchers by surprise.

"Canada’s housing market looks to have managed the equivalent of the great escape from the clutches of a lengthy, painful downturn," said BMO Capital Markets economist Doug Porter. "The rapid fire rebound in Canada’s housing market is the most astonishing economic development of 2009."

Cocomile said a jump in five-year mortgage rates in June also may have been a contributing factor to the boom. Posted rates at some banks went from 3.79 per cent to 4.49 per cent last month.

"You have a situation now where people are saying: `If I don’t buy with my locked-in rates, then I’m going to have to pay more later if I don’t get something now’," Cocomile said. "It becomes a bit of a false boom because people are encouraged to buy earlier than later."

That mini-bump in demand, combined with less inventory, has put pressure on prices even though Canada is officially in recession fast cash loans.

"It has certainly lasted longer than I anticipated and prices have been more stable than I anticipated," said CREA chief economist Gregory Klump. "We are seeing some snapback as buyers who were sitting on the fence jump into the market."

However, analysts warned that the months ahead could be more volatile as the effects of the recession linger.

"Only a rocket goes straight up forever. There will undoubtedly be some turbulence ahead," Klump said.

"Further gains will be much tougher to come by, particularly with the job market suffering," BMO’s Porter warned.

The Canadian Real Estate Association has forecast a 5.2 per cent average price decrease by the end of 2009 compared with 2008. But, based on improving conditions, the association now expects sales transactions in the second half will exceed the first half.

Analysts also expect pressure on prices to ease as more listings come onto the market in the second half.

Listings were down sharply in June, with just 4.2 months of inventory on the market so buyers had fewer choices.

This is the lowest level since August 2007, and below the peak of 12.8 months in January.

The months-of-inventory figure is the time it would take to sell homes listed at the current rate of sales activity.

Although average prices are up, demand in the more expensive markets in the country such as Toronto and Vancouver was a contributing factor in skewing the numbers higher.

"The strong rebound in sales activity is skewing prices upward nationally and in some provinces. Just as a sharp decline in activity in these markets skewed the average price lower in 2008," the association said.

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