After seeing a rise by 0.3 percent in November, the LEI posted another increase of 0.4 percent in December. This is the eight consecutive month of growth in the Index, suggesting that the weakness in GDP posted in the fourth quarter of 2019 was exaggerated by temporary factors such as the rail strike.
“Canadians can expect that slow economic growth will resume in the first half of 2020,” says LEI author and MLI Munk Senior Fellow Phillip Cross. “However, as economic growth was concentrated in the financial sector and strong US performance, the economy is not yet in the clear.”
The LEI is comprised of ten components that track changes in the Canadian business cycle and the short-term course of the economy. This tool is designed to predict Canada’s future economic growth performance. In December of last year, five of those ten components fell, while four components increased, and one component remained unchanged. Most of the components that declined were related to household demand.
“With growth somewhat concentrated and not broad based, there is still some risk of backsliding,” warns Cross. “Other factors, such as weakness in the global economy and ongoing protests on Canada’s railways could impede economic growth in the coming months.”
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