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Economic growth remains tepid with most from exports, not consumers

Ottawa – The Conference Board of Canada’s Composite Leading Index increased 0.2% in February 2014, matching the gains in the previous two months.



Ottawa – The Conference Board of Canada’s Composite Leading Index increased 0.2% in February 2014, matching the gains in the previous two months.

“The sources of growth in the Canadian economy continued to shift from household demand to exports,” said Pedro Antunes, deputy chief economist. “However, with business investment firmly stuck in neutral, this shift has not been enough to lift overall economic growth.”

Growth in the monthly indicator has slowed from a rate of 0.4% in September 2013. Five of the 10 components increased, and five decreased.

Most of the components related to the household sector posted declines. In particular, labour market conditions deteriorated. After five consecutive monthly declines, claims for Employment Insurance increased by 0.9% in February.

Demand for Canadian exports is improving and commodity prices rose 0.4% in February, the first increase in five months. Almost all of the increase reflected higher energy prices, which reached their highest level since April 2011.

“Despite the prospect of higher prices and profits, business investment intentions for 2014 have stalled. While the energy sector continues to break records, firms in Ontario and Quebec trimmed their investment intentions, particularly for finance and retailing,” said Philip Cross, author of the Index.

This is the third 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.


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