Continued strength in most domestic sectors plus healthier U.S. appetite for our exports
The MLI Leading Indicator advanced 0.2% in October to match its growth in September and accelerate from a rise of 0.1 per cent in August. There was no change in the index in July.
"These trends hold out the prospect for continuing albeit slow growth in the Canadian economy over the next six months, despite recession in Europe and uncertainty surrounding the U.S. budget plan," said Philip Cross, MLI Research and Editorial Coordinator.
"They reflect continued strength in most domestic sectors in Canada and a pickup in key markets in the U.S. for our exports."
As a result, the sources of growth in the leading index have shifted significantly in recent months:
• Housing has turned down, after leading growth in the spring.
• However, a softer housing sector has been outweighed by a rebound in manufacturing and the stock market after declines over the summer.
New orders for durable manufactured goods rose 1.2% in the MLI index, led by a large influx of orders for aerospace and slow but steady gains for autos and housing.
The average workweek in manufacturing posted its first increase in eight months.
Meantime, the U.S. leading indicator levelled off in October because improvement in financial conditions was offset by lower consumer confidence.
The Toronto stock market trended up 1.5% in October to show its first gain in six months. This reflected a firming of commodity prices, which levelled off in the autumn after steady declines over the summer.
Metals and energy prices firmed - with a noteworthy recovery for the beleaguered natural gas sector.
The housing index fell 1.7% in October with housing starts and existing home sales retreating. This was the fourth straight decline in the housing index, although slightly less rapid than the drop in September.
New and continuing claims for Employment Insurance continued to trend down slowly, in response to the ongoing improvement in labour market conditions.
The Macdonald-Laurier Institute's monthly Leading Economic Indicator series provides unique and valuable insights into the future course of the Canadian economy - giving advance warning of recessions and upturns. The next release date is January 7, 2013.
The Macdonald-Laurier Institute is an independent non-partisan Ottawa-based national think tank devoted to the development of Canadian public policy.
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