US leading indicator rises 0.6% fuelled by auto industry and housing; over all, four of nine components expanded, four declined and one was unchanged.
OTTAWA, JANUARY 6, 2014 – The Macdonald-Laurier composite leading index rose by 0.3 percent in November following an upward-revised 0.2 percent increase in October.
Four of the nine components expanded, while four declined; one was unchanged.
Philip Cross, a senior fellow with the Macdonald-Laurier Institute (MLI), who produces the index, said the most positive signals for improvement in growth come from a strengthening US economy, which appears to be moving towards higher growth in 2014 after an extended bout of sub-par gains.
Real gross domestic product in the United States has increased by less than 3 percent in each of the last four years, the longest period growth has not surpassed its long-term average since the 1930s.
In November, the leading indicator for the United States increased 0.6 percent, its largest advance in nearly two years.
“Growth in the US economy was fuelled by stronger auto sales and a continuing recovery in the housing market,” Mr. Cross said.
“Further gains in investment and employment will be encouraged by the end of the uncertainty surrounding a budget agreement in the US Congress.”
The MLI Leading Economic Indicator, established in October 2012 by Mr. Cross, former chief economic analyst at Statistics Canada, extends StatsCan’s now discontinued but extremely important work in this area, increasing the lead times while maintaining a low error rate. It provides unique and valuable insights into the future course of the Canadian economy. Leading indicators are vital for governments, businesses and individuals whose fortunes are tied to the twists and turns of the overall economy.
In Canada, the largest increase in the index was posted by prices on the Toronto stock market, which advanced 2.0 percent in November. The advance occurred despite a 1.6 percent drop in commodity prices, notably for metals and gold. Stock prices rose more for industrial and financial companies.
The other two financial components were mixed — the money supply expanded, while the interest rate gap worsened slightly.
Canadian manufacturing failed to reflect the improvement in US industrial demand. New orders dipped 0.2 percent after three straight gains, while the average workweek was unchanged.
Manufacturing shipments were nearly 5 percent ahead of their level a year earlier, reflecting an upward if unsteady trend overall.
The housing index declined 0.7 percent, the result almost equally of lower housing starts and fewer existing home sales. Claims for Employment Insurance fell for the third consecutive month.
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