Leading indicators index retreats for third month
Ottawa, ON -- According to Statistics Canada's latest Leading Indicators report, the composite leading index fell b...
Ottawa, ON — According to Statistics Canada’s latest Leading Indicators report, the composite leading index fell by 0.7% in November 2008, its third straight retreat and the largest since January 1991. The decline was dominated by a large drop in the stock market and in the housing index. The other eight components were about evenly balanced between increases and decreases.
Stock market prices continued to slump in November, the culmination of their worst three-month loss on record back to 1952. Metals suffered the largest declines as global demand tumbled.
The housing index turned down by 5.9%. This reflected both a sudden retreat in existing home sales in the autumn and a drop in housing starts in November. This was the largest decline for the housing index since a similar drop in 1995.
Consumer spending remained supportive of growth. Sales of both furniture and appliances and other durable goods continued to advance in October. However, preliminary data point to lower auto sales in November, at the same time as employment turned down.
The manufacturing indicators remained steady, despite the deepening slump in the U.S. economy. New orders were buoyed by gains in aerospace. Firms were quick to cut production as sales slowed, preventing a decrease in the ratio of shipments to inventories in the past two months. Firms also trimmed the workweek in factories, and laid off workers in November.
The money supply posted the largest increase of any component. This is the most obvious difference between the current slowdown and previous episodes in 2001, 1990, and 1981, when the money supply stalled or contracted. The leading indicator for the United States also showed large gains in the components related to monetary policy. This reflects the substantial stimulus coming from central banks in North America, along with most major nations around the world, in response to the squeeze in credit availability.