Canada’s economic outlook brightens
OTTAWA — The outlook for Canada’s economic performance strengthened for the eight straight month in February, due mainly to a rebound in the stock market, according to Statistics Canada’s composite leading index.
The federal agency’s forward-looking index on Wednesday showed a rise of 0.6%, following a 0.4 advance in January, with six of the 10 index components increasing during the month.
Last month’s reading was in line with economists’ forecasts. However, Statistics Canada revised its January increase downward from the previous estimate of a 0.7% advance.
“The financial components had the largest gains in the month (up 1.7%), with the stock market recovering after eight monthly declines and the money supply component continuing to expand,” Statistics Canada said.
“As well, manufacturing was supported by an increase in new orders (up 1.4%) and the ratio of inventories to sales rose for the fourth consecutive month. Household demand for durable goods also rose, supported by auto sales. The U.S. leading indicator rose as a result of increases in U.S. financial indicators and manufacturing.”
Meanwhile, the housing component declined 0.4%, after five consecutive monthly gains, while sales of furniture and appliances were down 0.3%.
Services employment was unchanged in February, and the average workweek was stable after four consecutive increases.
“Over the past 25 years, an average monthly (index) gain has been 0.4%, so it is pointing to a pick-up in GDP growth in the next few months — after what we suspect was a 0.15 decline in January GDP,” said Douglas Porter, deputy chief economist at BMO Capital Markets.