OTTAWA, ON (November 1, 2018): Canada’s economy is sending somewhat weak signals as it rounds out the year, suggesting that slow growth may continue into 2019.
The Macdonald-Laurier Institute’s Leading Economic Indicator (LEI), a tool designed to predict changes in the Canadian business cycle, increased by 0.1 percent in September. This represents a continuation of the stubbornly slow growth in the LEI that has been persistent since March.
While six of the ten components of the LEI increased slightly, the overall weakness in the index was primarily caused by continued negative trends in housing and consumer confidence. Labour markets also weakened further.
According to LEI author and MLI Munk Senior Fellow Philip Cross, the declines in housing and consumer confidence contrast to last year’s economic performance, as they were the high-growth sectors of late 2017.
On the other hand, there was some positive news in the index. Growth was led by the manufacturing and financial components, although Cross notes that this was before the stock market sell-off in October.
With such persistently slow growth in the index, Cross argues that Canada might be on track for a slow start to 2019. “Overall the sluggish growth of the composite index signals lacklustre growth in Canada’s economy continuing into the new year.”
To learn more about the leading economic indicator, click here.
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