Expect slow economic growth in early 2013, leading economic index says

The Macdonald-Laurier Institute (MLI) Leading Economic Indicator rose 0.1 per cent in November despite a slowdown in the manufacturing sector.

This marginal gain in the leading composite index augurs slow economic growth into early 2013, although the manufacturing sector turned down in November as uncertainty grew about the global economy, said Philip Cross, research and editorial coordinator at the MLI.

Both the manufacturing components retreated in November after advancing in the previous month.

New orders fell 0.7 per cent while the average workweek edged down 0.3 per cent, as the short-term outlook for the U.S. economy was clouded by fiscal cliff jitters.

Still there was a sign that fears about the U.S. going over the fiscal cliff were being discounted in financial markets.

“Interestingly, financial market indicators continued to expand,” Cross said.

“This is something that implies the markets were expecting disruption from the U.S. fiscal crisis to be short-lived a full month before Congress reached last-minute agreement to avoid sudden austerity shock to the economy.”

In Canada, housing remained the major blemish on the economy. The housing index declined 3.3 per cent in November — its largest of five straight monthly losses.

Both housing starts and existing home sales weakened as housing reached its lowest level since August 2011.

The other negative component for Canada was employment insurance claims, which rose for the first time in eight months, despite a pick-up in employment in the autumn.

The MLI monthly Leading Economic Indicator series provides unique and valuable insights into the future course of the Canadian economy – giving advance warning of recessions and upturns. The next release date is Jan. 29, 2013.

The Macdonald-Laurier Institute is an independent non-partisan Ottawa-based national think tank devoted to the development of Canadian public policy.