Canadian Leading Indicators, July 2010 Results

Date: August 19, 2010

Canadian Leading Indicators, July 2010 Results

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100819/dq100819c-eng.htm

Summary: The Canadian Composite Index of Leading Indicators advanced 0.4 per cent in July. While positive, the monthly growth rate slowed considerably from the 0.7 percent increase recorded in June. Growth in the manufacturing components of the index remained strong as new orders for durables rose 2.2 per cent for the sixth consecutive monthly increase. However, the housing index fell 4.1 per cent on declines of both starts and sales. The decline in home purchases was likely linked to a 0.6 per cent drop in furniture and appliance sales.

Analysis: The Composite Index of Leading Indicators can be used to estimate monthly GDP results several months ahead of their actual release. July’s report suggests that the economy may have grown at a slower pace compared to monthly growth rates experienced earlier in the year, which is in line with the Bank of Canada’s recent downgrade of its expectations for Canadian economic growth. Increased borrowing costs and more stringent lending guidelines for insured mortgages led to a slower pace of sales in the second quarter. While strong home sales and related economic activity played a key role in the initial recovery from recession, the drivers of growth over the longer term will be more diverse with a greater contribution from goods production.

Source: Toronto Real Estate Board

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