OTTAWA, ON (December 4, 2018): After sending weak and sluggish signals for the better part of 2018, Canada’s economy has tipped into decline as the year draws to a close.
The Macdonald-Laurier Institute’s Leading Economic Indicator (LEI), a tool designed to predict changes in the Canadian business cycle, dipped by 0.2 percent in October. This represents the first decline recorded by the index since January 2016.
Six of the ten components of the LEI retreated in October. The weakness in the index was widespread, affecting sectors ranging from consumer sentiment and employment insurance claims to commodity prices and the stock market to new orders for durable goods.
Two other components remained unchanged, and only two advanced.
Despite the negative overall trend, the housing index was an exception, posting its first significant gain of the year as both housing starts and existing home sales increased. Although housing was a major area of growth in the index for the end of 2017, it has remained uncharacteristically slow throughout 2018.
Since March of this year, the index has been indicating stubbornly slow growth. LEI report author Philip Cross argues that, with this most recent decline, “there is now even more reason to believe that 2019 may be set for a weak start.”
To learn more about the leading economic indicator, click here.
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