Ottawa – The Conference Board of Canada’s leading indicator increased 0.4% in May 2014 for the third time in four months. Six of the 10 components contributed to growth (one more than in April), while three were unchanged and one declined. While some sectors of the economy received a temporary boost from the return of more seasonable weather, the longer-term outlook remains one of modest growth.
The biggest change was a 1.8% hike in the housing index, its first advance since October 2013. Housing starts and existing home sales both returned to the levels they were at last fall before severe winter weather helped dampen activity.
Consumer confidence also recovered fully from its winter hibernation. An encouraging sign for households was that the recent increase in claims for Employment Insurance levelled off in May. Still, labour markets remain sluggish in the absence of sustained growth in business investment.
Exports continue to be the main source of growth in the economy.
Commodity prices and the Toronto stock market both rose 1.4%. The two are closely related, as commodities represent 38% of the TSX’s value, according to the Bank of Canada’s latest Financial System Review.
The growth that we have seen in the US economy has been slow to translate into increased manufacturing demand in Canada, where the average workweek was unchanged and new orders edged up 0.5% after a dip the month before.