Canada’s Leading Economic Indicator Posts 1st Gain in Six Monthsby and
Six of index’s 10 components contribute to growth in April
Measures related to consumer spending show deterioration
Canada’s leading economic indicator rose for the first time since October as stock-market gains outweighed signs of fading consumer demand.
The Macdonald-Laurier Institute’s Leading Indicator advanced 0.1 percent in April, according to a report Wednesday from the Ottawa-based policy research group. Six of the index’s 10 components contributed to growth, three were a drag and one was little changed.
The leading indicator seeks to detect early changes in economic momentum. The outlook has been distorted this year by temporary factors including a burst of automobile exports early this year and devastating wildfires in Alberta last month. Gross domestic product grew at a 2.4 percent annualized pace in the first-quarter, Statistics Canada reported Tuesday. Economists in a Bloomberg survey predict GDP growth will slow to 0.2 percent this quarter, according to the median forecast.
Philip Cross, former chief economic analyst at Statistics Canada, is publishing the index again after the government discontinued its own version in 2012 because of cost cuts. “The wildfires in Alberta will depress second quarter output, although this lost output will be recouped in the second half of the year,” Cross said in the report.
The leading indicator’s month-over-month improvement was reflected in the year-over-year performance, with the index advancing 0.6 percent from April last year, the fastest pace since July 2015.
Components related to consumer spending, the main driver of growth in recent years, declined. The Macdonald-Laurier Institute’s index of housing fell 0.1 percent and consumer confidence as measured by the Conference Board of Canada fell by 1.8 percent to the lowest since 2012.
Consumer sentiment may come under further pressure as the Alberta fires closed businesses, which may lead to a rise in claims for jobless benefits, Cross said.