Ottawa – The Composite Leading Index, a new Conference Board of Canada economic measure that tracks short-term indicators of the economy, rose by 0.4% in March — but much of the gain is due to the end of a long, cold winter.
“Exports remained the brightest sector of the Canadian economy, due in large part to rising demand in the United States. Industrial demand in the US spurred higher commodity prices, which helped the Toronto stock market to reach another record high,” said Pedro Antunes, deputy chief economist, The Conference Board of Canada.
Much of the growth in the Index is due to an unusually high number of new orders for manufactured goods, which posted the largest increase on record (back to 1952). However, the recorded growth in March is based on a single large defence contract. Therefore, despite the gains in the Index, only a small rebound in economic growth is expected, likely a result of the country emerging from of a harsh winter.
The Index grew by 0.2% in January, partly because of harsh winter weather in much of North America. The Index rose by 0.4% in February, following an upward revision.
In contrast to the improving outlook for exporters, weak housing and labour markets are weighing on consumer confidence.
“Domestic demand in Canada continues to languish. Both existing house sales and housing starts fell, with housing starts hitting their lowest level in over a year. Employment Insurance claims rose for the second month in a row,” said Philip Cross, author of the Composite Leading Index.
This is the fourth release of the Composite Leading Index, which sums up the performance of 10 components that track the short-term course of the economy. The newest of the Conference Board’s macroeconomic indicators, it signals changes in the business cycle (periods of faster and slower economic growth) approximately six or seven months in the future.
The author, Philip Cross, spent 36 years at Statistics Canada specializing in macroeconomics.