June 8 (Bloomberg) -- The Bank of Canada may raise interest rates as soon as July, after government reports showed a wider trade surplus, a fourth month of 33-year-low unemployment, and higher-than-expected home starts.

Canada's jobless rate stayed at 6.1 percent in May and the April international trade surplus grew more than forecast, Statistics Canada reported today in Ottawa. Work on new homes in May also outpaced economists' estimates, rising 8.4 percent, Canada Mortgage and Housing Corp. also said today.

The Bank of Canada said last month there was ``excess demand'' in the economy, and signaled policy makers may raise their benchmark interest rate July 10 to keep prices from rising too quickly. Low unemployment, record consumer spending and rising energy and housing costs have boosted inflation, and led some investors to bet on two rate increases by September.

``Today's trio of economic releases in Canada sends a mixed but generally positive picture,'' BMO Capital Markets economist Doug Porter said from Toronto. ``The economic results don't even give the Bank of Canada an amber light for rate hikes, let alone a red light.''

Parts of today's reports suggest inflation pressures may have eased a little. Employment rose 9,300 in May, less than the 14,300 new jobs economists surveyed by Bloomberg News expected, and the trade surplus widened because imports fell faster than exports.

The Canadian dollar rose to 94.32 U.S. cents at 4:03 p.m. in Toronto, from yesterday's 93.91 U.S. cents. The currency reached 94.79 U.S. cents on June 4, the highest since June 1977, as traders speculated rates would go up in July.

Futures Contracts

The yield on the September bankers' acceptance contract rose 1 basis point to 4.78 percent on the Montreal Exchange, suggesting investors predict two increases by that month. The benchmark lending rate has been 4.25 percent since May 2006.

The wider trade surplus suggests the Canadian dollar's rise to 30-year highs isn't enough of a brake on the economy to keep inflation close to the Bank of Canada's 2 percent target. Earlier this year, Governor David Dodge said the high dollar's impact on Canadian factory exports would help curb inflation.

The country's manufacturers export half their production, and the currency's rise makes their goods more expensive abroad, while making imports cheaper for Canadians.

The surplus widened to C$5.76 billion ($5.4 billion) in April, up from C$5.1 billion in March that Statistics Canada had said earlier was only C$4.64 billion. Economists polled by Bloomberg had forecast a C$4.8 billion surplus for April.

Exports

Exports fell 0.3 percent to C$40.7 billion, as automobile shipments fell 4.6 percent and energy shipments fell 4 percent on lower production volumes, the statistics agency said. At the same time, exports of agricultural and industrial goods rose to records, on prices for wheat, copper and nickel.

Imports fell 2.2 percent to C$34.9 billion, with declines in all categories except energy.

Record prices for Canadian energy and metals exports have driven home prices up, left companies struggling to meet demand, and sent the currency soaring. Dodge has kept the main interest rate on hold for the longest stretch since 1973, because the dollar's strength has hurt factory exports.

There was more evidence today that the economy has recovered. Companies are starting to raise wages and prices as they fill rising orders. Average hourly wages increased 3 percent from a year earlier, faster than April's 2.9 percent pace, Statistics Canada said in today's labor report.

Housing Starts

Also, the growth in new-home construction comes at a time when housing prices are at record highs. Prices of homes listed on the Canadian Real Estate Association's Multiple Listing Service rose to a record C$323,936 in April, the realtor group said last month. Statistics Canada reports April new-home prices on June 11.

Those rising costs are showing up in the Bank of Canada's key measure of future inflation trends, the so-called core rate that excludes eight volatile items and some taxes. That measure rose to a four-year high of 2.5 percent in April from a year earlier, Statistics Canada said May 17. The agency publishes inflation data for May on June 19.

``The bank will probably take out some insurance to prevent inflation from taking hold,'' by raising the benchmark rate at the July 10 meeting, said Paul Ferley, assistant chief economist at Royal Bank of Canada.

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net.

Last Updated: June 8, 2007 16:07 EDT