The Canadian economy, thanks to more business confidence and stronger foreign demand, is close to a "tipping point" that will usher in an era of more normal growth, Bank of Canada governor Stephen Poloz said Wednesday.

Poloz also said this growth could likely be accommodated without risk of a boost to inflation.

“Evidence suggests we are now close to the tipping point from improving confidence into expanding capacity,” Poloz told members of the Vancouver Board of Trade. “Stronger investment means more new jobs will be created."

The central bank governor cited data that showed there are now 40,000 more firms in Canada with at least one employee than there were last year at this time.

"This pace is considerably stronger than we would expect in normal, non-recessionary times and suggests that we may be replacing some of the firms that were lost in the recession with new ones," he said. "This is excellent news."

'Growth will become natural'

Also encouraging, he said, were recent private surveys that pointed to signs of a more positive business outlook.

Poloz said the central bank is seeing foreign demand for Canadian goods picking up. He said Canada's export market will benefit from solid increases in U.S. business and residential investment, with the lagging machinery, equipment and wood products sectors enjoying some of the biggest benefits.

"I anticipate that the Canadian economy will normalize and growth will become natural, in contrast to the economic activity of the past six years, which has been fuelled by policy, including record-low interest rates," Poloz said.

"Natural growth will be self-generating and self-sustaining, and the economy will be growing at its potential, as its productive capacity expands."

Statistics Canada reported in late August that growth in the second quarter slowed to an annualized rate of 1.7 per cent. 

The Bank of Canada has maintained its one per cent overnight interest rate for three years. While it has indicated that its key rate will rise at some point in the future, most economists think that point is at least a year away.

CBC News

This partnership with BC Hydro and FortisBC gives home owners up to $3500 in rebates for energy saving improvements to their homes, including up to:

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Did you know?

Since 2008, the LiveSmart BC Program has helped more than 100,000 home owners in communities throughout BC improve the energy efficiency of their home.  Efficiency incentive program participants save an average of 15-28% on their energy bills after completing the  program.

Vancouver, BC – September 16, 2013.  TheBritish Columbia Real Estate Association (BCREA) reports that a total of 6,863 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during August, up 28.6 per cent from August 2012. Total sales dollar volume was 39.7 per cent higher than a year ago at $3.66 billion. The average MLS® residential price in the province was $533,400, up 8.6 per cent from August 2012.

"After sitting on the sidelines for much of 2012, home buyers were out in force during the summer months,” said Cameron Muir, BCREA Chief Economist. “Fear of a housing market hard landing has given way to a sense of urgency to lock-in a mortgage at a low interest rate."

While higher mortgage interest rates are on the horizon, BCREA forecasts the five-year posted mortgage rate to be 50 basis points higher a year from now. The impact on consumer demand is expected to be largely offset by stronger economic conditions and the associated employment growth.

Year-to-date, BC residential sales dollar volume was up 1.5 per cent to $26.5 billion, compared to the same period last year. Residential unit sales were down 0.6 per cent to 49,849 units, while the average MLS® residential price was up 2 per cent at $532,130.