In February, the Canadian Composite Index of Leading Indicators rose 0.8 per cent, after a revised 0.7 per cent increase in January. It was the ninth straight month that the index has remained in positive territory. Nine of the 10 index components increased, with only the average weekly hours worked, which was down 0.8 per cent, bucking the trend.

Canadian Composite Index of Leading Indicators

On the consumer-driven side of the economy, much of February’s overall advance can be traced to strength in the housing component of the index. A strong rebound in consumer-related sectors has been the driver of economic recovery to date. However, for recovery to be sustained, goods producing sectors associated with trade must start to contribute more to growth.

Improvement in trade will be dependent on economic recovery in the United States – Canada’s single largest trading partner. The latest leading indicator release contained good news in this regard. The US leading indicator also increased for the ninth straight month. The improving economic situation south of the border has arguably spurred increased orders for goods manufactured in Canada, with new orders for durable products increasing by over six per cent in February.

Month Over Month Percentage Change

Moving forward, however, it will be important to watch the impact of the high value of the Canadian dollar vis-à-vis the US. A strong currency relative to our trading partners’ has been generally seen as detrimental to trade and by extension Canada’s manufacturing sector.

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Source: Statistics Canada with economic commentary by Jason Mercer – TREB Senior Manager of Market Analysis

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Filed under: Real Estate News

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