Money world

Official figures show that British government borrowed far less in July than it did in the same month a year ago.

The Office for National Statistics says Friday that public sector net borrowing, which excludes financial interventions such as bank bailouts, was 20 million pounds ($33 million), way down on last year’s equivalent 3.5 billion pounds ($5.8 billion). It was also much lower than the 2.5 billion pound ($4.1 billion) shortfall expected in markets.

The statistics office said the levy on banks’ balance sheets contributed some 660 million pounds ($1.1 billion) in July while public finances were also boosted by larger corporation tax receipts, sales taxes and lower spending by local government.

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Financial consultant Jose Jimenez has been on his own gut-wrenching roller coaster ride the last few weeks — and not because of the stock market fluctuations he monitors daily.

Jimenez, 35, has been trying to buy his first home.

“In a way, I’ve been rooting for the markets to tank a bit and hoping that might encourage other people not to buy right now, but that doesn’t seem to be the case,” says Jimenez, whose wife is expecting their second child.

In fact, whipsawing markets, fears of a double-dip recession and global economic uncertainty seem to have made housing look as good as gold.

Canadian home sales were up 12.3 per cent last month from July, 2010 and are expected to grow slightly the rest of this year because of low interest rates, the Canadian Real Estate Association said Tuesday.

“We anticipate that, going forward, the housing market in Canada is going to be an oasis of stability compared to what is expected to be further volatility in financial markets,” Gregory Klump, CREA’s chief economist, said in a telephone interview.

Almost 285,000 housing units have sold across Canada so far this year, just 1.6 per cent below sales for the same period last year, and that’s expected to hit 450,800 by the end of 2011, according to CREA forecasts.

That’s despite dire predictions earlier this year from some housing analysts that the real estate bubble is overdue to burst and send Toronto prices toppling by as much as 25 per cent.

Jimenez is keenly aware of all those numbers but has a few more pressing ones on his mind: His second child is due in September, his 2-year-old daughter Sadie will start school in a couple of years and Jimenez and his wife, Sydney Richardson, just want a house they can make a home.

Richardson is now worried the couple are “doomed” to have to raise their children in their two-bedroom Beach apartment after losing out Monday in a six-person bidding war — their second in just a few weeks — on a renovated three-bedroom Beach semi that was listed for $699,000.

The couple offered $703,000, only to be outdone by a so-called “bully bid” — a down-to-the-wire offer almost $100,000 over asking price payday loan.

Last month they were braced to offer $70,000 over the $550,000 asking price for a Rhyl Ave. house but found themselves up against 13 other potential buyers. The house sold for $120,000 over asking.

The couple has talked about putting things on hold until the real estate market calms down, but their biggest fear is that day will never come.

While Sonya Gulati, an economist at TD Economics, anticipates sales will be a little more subdued in the fall, she said first-time buyers and immigrants are still being drawn into the market by interest rates that are expected to remain low until 2013.

“On the one hand, they are incredibly brave given all the economic uncertainty out there,” says Gulati, “but you need a place to live and a house is a long-term purchase so people seem to think it makes sense despite the market gyrations.”

Real estate agent Dave Tsaparis says he’s seeing more and more home buyers, banking on low interest rates, taking on mortgages of $300,000 to $500,000.

Veteran Beach real estate agent Dianne Chaput blames lack of supply for many of the bidding wars, but expects that could ease in the fall as more baby boomers look to cash out on their biggest asset at peak market.

Domenic Polsoni is so confident real estate is a sure bet, he recently traded in his Milton home, and gave up one car to help finance the move to a more expensive house in the Dufferin St. and Sheppard Ave. area.

“People have been saying for years that the real estate bubble is going to burst, but I can’t imagine that will happen. We survived a major hit in 2008, people held their breath and then everything just seemed to march along.”

Jimenez fears getting caught up in the current real estate “panic.”

“But this is the neighbourhood where we want to raise our kids. Even if we were to take a short-term loss, I wouldn’t be too worried about it in the long run.

“I think we’d definitely get the value back from it, not just in the sale price, but in the life we will have had bringing up our family in that neighbourhood.”

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A man and teenager were charged Saturday with the murder of three men in a hit-and-run attack during riots in the English city of Birmingham, the deadliest attack during the past week’s street unrest in Britain.

Both males would be arraigned Sunday morning at Birmingham Magistrates Court on three counts each of murder, police said.

Joshua Donald, 26, from a street gang stronghold in Birmingham was identified as the older suspect. The 17-year-old suspect, who lives in the same district as the three dead men, was not identified because of his juvenile status.

The breakthrough follows an intensive investigation by a team of 70 detectives into Wednesday’s hit-and-run slaying of Haroon Jahan, 20, and brothers Shazad Ali, 30, and Abdul Musavir, 31 no teletrek payday advance. They were killed after a car, allegedly containing several looters, struck them at high speed as they stood guard in front of a row of Pakistani-owned shops.

The killings threatened to ignite clashes between the area’s South Asian and black gangs, but the father of Haroon Jahan made a series of public statements pleading for racial harmony and no retaliation.

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South Korea’s inflation rate accelerated for a second straight month in July as rising prices defy a series of central bank interest rate increases.

The country’s consumer price index rose 4.7 percent last month from the year-before period amid higher costs for food and transportation, the government’s Statistics Korea announced Monday. That followed an increase of 4.4 percent in June.

The result for July matched the 4.7 percent reached in March, which was the highest since 4.8 percent recorded in October of 2008.

South Korea, Asia’s fourth-largest economy, is not the only country in the region battling rising prices.

Surging inflation is among the factors threatening East Asia’s economic outlook, the Manila-based Asian Development Bank said in a report last week, emphasizing that levels in many economies have risen above 10-year averages.

Inflation in China, Asia’s largest economy, rose to a three-year high of 6.4 percent in June.

The Bank of Korea has raised its key interest rate five times in the past year to 3.25 percent in a bid to stem price pressures, though it kept the borrowing cost unchanged in July.

South Korea’s inflation rate has now been above 4 percent for seven straight months, a level the central bank sees as intolerable. The bank’s next meeting to set the benchmark interest rate is scheduled for Aug. 11.

In June, the International Monetary Fund expressed concern about South Korean inflation and urged “further steady monetary tightening.”

So-called core inflation, which strips out volatile agriculture and oil prices, also accelerated in July, increasing 3.8 percent from the year before, Statistics Korea said. It had risen 3.7 percent in June.

Compared with the previous month, the overall consumer price index rose 0.7 percent in July.

South Korea’s latest inflation figures came after the central bank announced last week that the country’s economic growth slowed in the second quarter to an expansion of 0.8 percent amid weaker exports, manufacturing and services.

The central bank last month raised its inflation forecast for this year to 4 percent from the previous figure of 3.9 percent. It also cut its forecast for economic growth to 4.3 percent from 4.5 percent.

The bank’s inflation target is 3 percent, but it has set a “tolerance range” of plus or minus one percentage point from that level. The consumer price index has exceeded the upper end of that range _ 4 percent _ every month this year through July.

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Toyota’s electric-gasoline hybrid car technology will be utilized to help ease power shortages in Japan’s disaster-struck northeast, part of a set of measures the automaker hopes will underline its commitment to the region.

Toyota Motor Corp. said Tuesday it will donate emergency power supply systems linked to its Prius hybrid cars to prefectures (states) in the Tohoku region ravaged by the March 11 earthquake and tsunami.

The systems will be fitted to about 40 of the automaker’s Prius hybrids. Hybrid vehicles can be used to store and generate electricity because it is partly an electric vehicle that runs on a high-quality battery.

Toyota’s hybrid technology has already been helping in quake-affected areas, which suffered massive blackouts, as an emergency source of electricity.

The automaker said the positive reviews for its Estima hybrid minivan, which comes with regular electrical outlets to plug in and run household appliances for up to two days, are prompting it to make it available as an option for the Prius within a year.

Toyota also announced Tuesday that it will set up a manufacturing training school in the northeast, hoping to send home the message it remains committed to making cars in Tohoku and Japan overall despite mounting obstacles.

Fears are growing that Toyota and other major manufacturers may move production abroad after the tsunami and earthquake left key suppliers in a shambles, disrupting production.

Another setback are the meltdowns at a nuclear power plant, which is crimping the electricity supply and forcing manufacturers to cut back on electricity use.

Recruiting for the new technical school for high school graduates and employees of Toyota affiliates in the northeast will start in July next year. The first class for 10 to 30 students will begin in April 2013, the world’s largest automaker said in a statement.

Toyota also said it will donate 300 million yen ($3.8 million) for educational help for children, many who lost their parents in the disaster, and another 3 million yen ($38,000) to support the arts in Tohoku.

Last week, Toyota announced it was consolidating its operations among Tohoku group companies, and strengthening research and development in the region to make it Toyota’s third production center in Japan _ after its headquarters in central Japan and Kyushu, southwestern Japan.

One vehicle set to be produced in northeastern Japan is a small hybrid that’s a key part of Toyota’s lineup of green vehicles, according to the automaker.

Other Japanese automakers are also eyeing renewable energy as a business opportunity, taking advantage of the power-generating feature of green cars.

Nissan Motor Co. is testing a super-green way to recharge its Leaf electric vehicle using solar power. Honda Motor Co. already has solar panel and home power generating businesses that it is planning to strengthen as interest grows in renewable energy because of the nuclear crisis.

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CHICAGO

Dollar figures in millions

Rank Company Net income Change

1 Perficient $6.5 343%

2 Brown Shoe $37 292%

3 Arch Coal $159 277%

4 Synergetics USA $5.7 259%

5 Insituform Technologies $60 131%

6 Peabody Energy $774 73%

7 LaBarge $15 44%

8 Express Scripts $1,181 43%

9 Reinsurance Group of America $574 41%

10 FutureFuel $23 36%

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Inflation in Germany, Europe’s largest economy, unexpectedly eased in May after oil prices dropped from a 2 1/2-year high.

The harmonized inflation rate fell to 2.4 percent from 2.7 percent in April, the Federal Statistics Office in Wiesbaden said today. Economists had expected inflation to hold at the highest level since September 2008, the median of 17 forecasts in a Bloomberg News survey showed. On the month, consumer prices declined 0.2 percent.

Oil prices have dropped 11 percent this month after breaching $114 a barrel in April, leaving households with more money to spend. European Central Bank officials have signaled they are ready to raise borrowing costs further to curb price pressures after increasing the benchmark interest rate to 1.25 percent last month, even as peripheral nations such as Greece, Portugal and Ireland remain mired in a sovereign-debt crisis.

“Today’s German inflation numbers are just a temporary breather,” said Carsten Brzeski, an economist at ING Group in Brussels. “Obviously, with these inflation numbers, the ECB won’t hastily rush to a June hike. The German data is also not soft enough to put the ECB off from another hike in July.”

On a non-harmonized basis, inflation slowed to 2.3 percent in May from 2.4 percent and prices were unchanged on the month, the statistics office said.

Price Mandate

VCI, the main association of German chemical companies, on May 17 raised its forecast for production, sales and prices this year in the industry, on increasing global demand.

“We have to avoid commodity-price increases becoming entrenched in longer-term inflation expectations, which could have second-round effects on wages and prices,” ECB President Jean-Claude Trichet said yesterday. “We are carefully monitoring the situation and we stand ready to do whatever is necessary to fulfill our mandate.”

Euro-area inflation probably remained at 2.8 percent this month, according to the median of 27 forecasts in a Bloomberg survey. The European Union’s statistics office in Luxembourg will publish the data on May 31. Economists in a separate survey forecast the ECB will raise its main lending rate to 1.75 percent by the end of the year.

The German economy grew 1.5 percent in the first quarter as companies boosted spending to meet increased export demand and construction rebounded from a slump in the previous three months. The government predicts growth of 2.6 percent this year after a record 3.6 percent expansion in 2010.

At the same time, countries from Greece to Portugal are struggling to grow amid a debt crisis that’s shaking the foundations of the single currency. The euro area will grow 1.6 percent this year after expanding 1.8 percent in 2010, the European Commission forecast this month.

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