OTTAWA, ON (April 1, 2019): Following a meager performance in January, February’s numbers continue to suggest that Canada’s economy is stuck in the rut.
The Macdonald-Laurier Institute’s Leading Economic Indicator (LEI), a tool designed to predict changes in the Canadian business cycle, remained unchanged in February. This follows a disappointing start to 2019 in which the LEI also remained stagnant.
“Importantly, the current lack of movement in the LEI follows three consecutive months of decline,” writes LEI author and Munk Senior Fellow Philip Cross. “Together, the last two quarters have been pointing to fairly weak growth.”
Once again, six of the ten components of the LEI declined in February, and four increased. After a brief upturn in January which helped to buttress GDP, housing posted its largest retreat since last spring. Fewer claims for employment insurance reflected ongoing strength in the labour market.
With such persistently poor performance tracked over the last few months, a trend is starting to form in the LEI.
“The stall in the leading indicators suggests the underlying weakness in the trend of GDP may continue beyond the first quarter,” explains Cross.
Although January’s GDP numbers may provide a glimmer of hope for Canada’s economic outlook, the upshot of February’s data reveal that the near economic future is just as bleak as it was a few months ago.
“Even assuming that January’s GDP numbers are a sign of a reversal following a few dismal months, the fact of the matter is that February’s data point to a still-weak economy that will likely remain weak beyond Q1 2019.”
To learn more about the leading economic indicator, click here.
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