Index rose 0.1 percent in October with three of nine components falling; housing dipped after recent hot streak
OTTAWA, November 29, 2013 – The Macdonald-Laurier composite leading index slowed to an increase of 0.1 percent in October from a 0.3 percent gain in September.
Three of the index's nine components -- commodity prices, the average workweek in factories and the interest rate gap -- fell in October. In contrast, during the month before, all nine had contributed to growth.
The slowdown is similar to the situation at the outset of 2013, when an improving outlook for the economy failed to gain traction, according to Philip Cross, a senior fellow with the Macdonald-Laurier Institute (MLI), who produces the index. "The deceleration is likely to be temporary," Mr. Cross said.
The MLI Leading Economic Indicator, established in October 2012 by Cross, former chief economic analyst at Statistics Canada, extends StatsCan's now discontinued but extremely important work in this area, increasing the lead times while maintaining a low error rate. It provides unique and valuable insights into the future course of the Canadian economy. Leading indicators are vital for governments, businesses and individuals whose fortunes are tied to the twists and turns of the overall economy.
In October, the housing index decelerated markedly, from a 2.5 percent increase in September to a gain of just 0.2 percent in October.
"The slowdown in housing reflected a dip in housing starts and a moderation in the growth of existing home sales, after three consecutive gains of 2.1 percent," Mr. Cross said.
He said the outlook for exports continued to brighten, as the United States weathered the federal government shutdown with little discernible adverse effect. Growth in the US leading indicator improved slightly to 0.5 percent.
"This buoyancy was reflected in sustained growth of 1.1 percent in new orders for manufactured products in Canada. The Toronto stock market also advanced 1.1 percent, despite the dip in commodity prices," Cross said.
Elsewhere, labour market conditions in Canada continued to improve steadily, and as a result, claims received for employment insurance fell slowly.
The next release of MLI's leading economic indicator is Dec. 30, 2013.
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