TORONTO (Reuters) - The Canadian economy appears to be on track in its recovery, with reports on Monday showing businesses upbeat about hiring intentions and expansion, while the three-month trend on housing starts continued to show strength.

The Canadian dollar headed back toward parity with the greenback after the upbeat business mood was revealed in a pair of surveys by the Bank of Canada, and after Finance Minister Jim Flaherty repeated that the recent rise by the currency has been "relatively orderly".

Canadian businesses are preparing to expand and to hire more workers, but twice as many of them now see inflation at the high end of the central bank's target range than did so late last year.

The Bank of Canada's first-quarter business outlook survey, showed that while there continues to be plenty of slack in the economy as it emerges from recession, companies are upbeat about future sales, investment and hiring.

"Responses to the spring survey provide further evidence that the recovery is taking hold," the bank said.

In a separate survey in the first quarter, senior loan officers at the country's major banks told the Bank of Canada that business lending conditions had eased in the period, both in terms of pricing and availability.

The survey results may tilt the balance slightly toward an earlier than expected interest rate hike by the Bank of Canada, although analysts are divided on that possibility.

The bank has kept its overnight rate at a historic low of 0.25 percent since April 2009, and pledged to hold it at that level until the end of June, unless inflation threatens to spiral out of control
Scotia Capital economist Derek Holt said the central bank is likely to "look favorably" on the pair of surveys. Scotia recently moved up its forecast for the bank's first rate hike to June 1.

MARCH HOUSING STARTS DIP

Earlier, Canadian housing starts unexpectedly dipped 1.5 percent in March to 197,300 units from an upwardly revised 200,400 units in February.

But the figures for the two prior months were revised higher, suggesting the residential housing sector remains a positive factor in the country's economic recovery.

"This was no weak report," said Robert Kavcic, an economist at BMO Capital Markets.

"Single-family starts hit a four-year high, and February's total was revised up to 200,400 to mark the first month above the 200,000 mark since October 2008," Kavcic said.

(Additional reporting by Louise Egan in Ottawa, Jennifer Kwan in Toronto, Rod Nickel in Winnipeg; editing by Rob Wilson)