OTTAWA, ON (October 7, 2019): Though the Canadian economy has slowed somewhat since July, it continues to show modest growth heading into the end of 2019.
The Macdonald-Laurier Institute’s Leading Economic Indicator (LEI), a tool designed to predict changes in the Canadian business cycle, rose by 0.2 percent in August. Growth has slowed somewhat, with the three previous months each showing around a 0.3 percent growth in the LEI. However, the Canadian economy’s continued modest gains in August represent the sixth straight month of LEI growth.
Rising a total of 1.7 percent since March, the LEI is pointing towards continued recovery from the near-recession figures shown at the end of 2018.
“Growth is continuing despite a slowing trend,” says LEI author and Munk Senior Fellow Philip Cross. “Though the housing market remains the main source of growth in the economy, August’s numbers paint a less optimistic picture than recent months.”
Of the 10 indices measured, around half showed modest or no improvement. The slowing trend in the economy is reflected in the relative decline of five indices after only one declined in July. Once again, positive economic activity remains concentrated mostly in the housing market which is continuing to post large gains.
Furthermore, Canada’s economy is being dragged down by declines in the global economy. As demand for commodities and manufactured goods has dropped, Canada has experienced a lowered demand for some of our common exports.
While Canada’s economy remains well positioned to continue its slow but steady gains to close out 2019, it will be important to continue monitoring the trend line.
“We should be cautious in how we look at these numbers,” warns Cross. “The effects of the turmoil that took hold in the global economy over the summer may not have fully materialized. Canada may yet experience a more protracted economic slowdown.”
To learn more about the leading economic indicator, click here.
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