Philip CrossHousing demand surged prior to the tightening of mortgage rules, which led to increase in growth late last year, writes Munk Senior Fellow Philip Cross in November 2017's MLI Leading Economic Indicator.

OTTAWA, ON (Jan. 1, 2018): Canada's economic growth increased in November.

The Macdonald-Laurier Institute’s Leading Economic Indicator, a tool designed to predict changes in the Canadian business cycle, rose by 0.5 percent in November.

The increase reinforced the acceleration to 0.3 percent growth in October, after several months of markedly slow growth.

The upturn in the last two months originated mostly in the housing index, which rose by 1.1 percent in October and then 3.1 percent in November.

“Demand surged in response to the impending tightening of mortgage rules on January 1 mandated by federal regulators,” says Munk Senior Fellow Philip Cross, the author of the LEI. The mortgage broker association Mortgage Professionals Canada estimates that about 50,000 potential home buyers will be disqualified by the new regulations.”

Cross goes on to note that “The outlook for the US economy also improved as consumer sentiment recovered from its slump over the summer.”

To learn more about the leading economic indicator, click here.

The leading index is designed to signal an upcoming turn in the business cycle, either from growth to recession or from recession to recovery, six months in advance, with an error rate of less than five percent. It does so by monitoring what businesses and households have actually committed to in terms of future spending and production in the most cyclically-sensitive sectors of the economy. It also incorporates global influences such as the direction of the US economy and the broad thrust of monetary policy.

The index is available on Bloomberg and is intended for journalists and analysts who follow the macro performance of the Canadian economy. Quarterly economic analyses by Cross, based on the results of the indicator, will appear on the MLI website.


Philip Cross is a Munk Senior Fellow with the Macdonald-Laurier Institute. He previously served as the Chief Economic Analyst for Statistics Canada, part of a 36-year career with the agency.

The Macdonald-Laurier Institute is the only non-partisan, independent national public policy think tank in Ottawa focusing on the full range of issues that fall under the jurisdiction of the federal government.

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