OTTAWA, ON (December 5, 2019): The most recent Macdonald-Laurier Institute Leading Economic Indicator (LEI) shows that Canada’s pattern of slow and steady economic growth in is set to continue. But there is reason for concern that the growth is not broad based.
“We are seeing continuous growth in Canada’s economy,” says LEI author and MLI Munk Senior Fellow Philip Cross. “However, this growth rests on a handful of sectors only.”
The LEI, a tool designed to predict changes in the Canadian business cycle, rose by 0.4 percent in October. This marks the sixth consecutive month of growth for the Canadian economy and a rise above the previous six months average of 0.3 percent.
While 7 components measured in the LEI were somewhat positive, only two were strongly positive. Housing continues to lead growth despite a slow down in last month’s gains. Furthermore, consumer sentiment continues to boost the economy, leading growth along with the housing market.
“While positive numbers should be celebrated, growth remains narrowly-based,” warns Cross. “Only certain sectors are poised to benefit.”
In the past, Canada’s growth has been closely linked to the global economy. However, an upturn in the leading indicator for the United States did not lend strength to Canadian markets. Neither commodity prices nor demand for manufactured goods in Canada saw an increase with the upturn in US markets.
But, as Cross explains “despite some disappointment, Canada is poised to continue the trend toward somewhat slow economic growth.”
Looking ahead to 2020, the slow and steady growth that has come to characterize the latter half of 2019 will likely continue into the new year with support from housing demand.
To learn more about the leading economic indicator, click here.
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