Canadian Leading Indicators, July 2009

Source: Statistics Canada

Link to Release:

http://www.statcan.gc.ca/daily-quotidien/090819/dq090819b-eng.htm

Summary: Statistics Canada releases a series of leading indicators that can often point toward economic expansion or contraction a few months in advance. The table in this commentary summarizes these indicators. In July, the composite index of leading indicators increased by 0.4 per cent. This represented the first month of growth in eleven months. Notable leading indicators that pushed the composite index into positive territory were the housing sector, equity markets and consumer spending on durable goods.

Analysis: Many commentators, including the Bank of Canada, are calling for a return to economic growth in the second half of 2009 and even more so moving through 2010. The positive result for the composite index of leading indicators in July may be pointing in this direction. Growth in the housing sector, which we certainly experienced firsthand in the GTA during the spring and summer, and in discretionary consumer spending is certainly good news given that consumer spending is a key driver of overall economic growth in Canada. Growth in equity markets, if sustained, points to increased wealth for investors, but also the expectation that the value of Canadian corporations is expected to increase moving forward. Of course, one month of growth in the composite index following eleven months of contraction does not constitute a trend. It will be interesting to see if the march into positive territory continues.

canadian_leading_indicators_july2009

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