Canada’s Leading Indicators post gain in August, except in manufacturing
Ottawa, ON -- Led by strong domestic demand, Canada's leading indicator index posted a 0.3% gain in August 2005, th...
Ottawa, ON — Led by strong domestic demand, Canada’s leading indicator index posted a 0.3% gain in August 2005, the same as July, Statistics Canada reports. Six of the 10 components rose, while one was unchanged. Manufacturing continued to weaken.
Consumer spending remained a wellspring of growth. Sales of durable goods rose briskly (+1.1%) for the third consecutive month, as auto sales were spurred by discount programs. These three straight gains were the largest in more than two years.
The growth of housing demand continued for the fourth month in a row. House sales hit another record high in August, led by Western Canada. Housing starts fell 20%, their largest monthly drop since March 1995. Central Canada led the retreat after a sharp increase in vacancy rates. In Montreal alone, vacant multiple units jumped 24% in July and August. Conversely, housing starts continued to rise in Alberta. Western Canada led the nation in the growth of construction jobs in August.
Business and personal services were another source of strong growth, with jobs up 0.7% in August, the largest gain since December 2002. Support services for business, such as credit bureaus, call centres and document management have led this increase, rising by one-quarter in the past year. Western Canada led these gains, fuelled by the booming resource sector. Energy and utility stocks also drove another gain in the stock market. Energy stocks have nearly doubled in value since August 2004.
Manufacturing continued to lag due to widespread weakness, especially forestry products. The drop in new orders worsened. Inventories stopped rising, but the ratio of shipments to stocks resumed its slide. Shipments have fallen for four straight months, their longest slide since late in 2001. The average workweek stayed unchanged.
The U.S. leading index eked out a second straight 0.2% gain. As in Canada, the U.S. leading indicator was restrained by weakness in manufacturing. In particular, new orders for consumer goods fell as sales slowed over the summer.