Commodity demand drives growth in Canadian economy
Ottawa – The Conference Board of Canada's Composite Leading Index, a new economic measure that tracks short-term indicators of the economy, increased 0.4% in April 2014. But the outlook is mixed – more promising for exporters, and...
Ottawa – The Conference Board of Canada’s Composite Leading Index, a new economic measure that tracks short-term indicators of the economy, increased 0.4% in April 2014. But the outlook is mixed – more promising for exporters, and less so for the labour market and housing sector.
“The leading indicator points to a continuing shift in the sources of growth – from domestic spending to exports – but little change in the overall rate of growth,” said Pedro Antunes, deputy chief economist.
Five of the 10 components increased, and those were mostly related to export demand for Canada’s commodities. Higher resource prices contributed to an eighth consecutive month of growth in the Toronto stock market. In addition, the Bank of Canada’s commodity price index posted the largest increase of any component, rising 2.4% – its fastest advance in three years.
“Agricultural prices have led the latest gains in commodities. Wheat prices in particular received a boost from the uncertain outlook for exports as a result of political turmoil in the Ukraine,” said Philip Cross, author of the Composite Leading Index for the Conference Board.
Both manufacturing components – new orders, and the average workweek in factories – were unchanged in the month, while the housing and labour markets remained a source of weakness. Claims received for Employment Insurance rose 1.8%, the largest jump in almost three years and the third consecutive monthly increase. The housing index, meanwhile, retreated for the sixth consecutive month.
This is the fifth 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) about six or seven months in the future. The author, Philip Cross, spent 36 years at Statistics Canada specializing in macroeconomics.