Philip CrossSlowdown in home sales has led to slight slowdown in the Leading Economic Indicator, writes Philip Cross. But the outlook for exports remains mixed and manufacturing continues to struggle.

OTTAWA, ON (March 5, 2018): The Macdonald-Laurier Institute’s Leading Economic Indicator, a tool designed to predict changes in the Canadian business cycle, rose by 0.4 percent in January, after consecutive gains of 0.5 percent.

The slight slowdown mostly originated in the housing index. “After surging at year-end before tighter rules for mortgage eligibility took effect on January 1,” says Munk Senior Fellow Philip Cross, the author of the LEI, “the housing index dipped by 0.1 percent as existing home sales slowed significantly.”

The outlook for Canada’s exports remained mixed. A buoyant US economy helped propel commodity prices and the stock market higher. However, as Cross notes, “manufacturing continues to struggle to capture more of the US market, with new orders edging down and the average workweek unchanged.”

More broadly, growth in Canada has not made the transition from household and government spending to exports and business investment which the Bank of Canada has tried to engineer. Statistics Canada’s annual survey of investment revealed a slight drop in business investment plans for 2018.

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

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