MLI Leading Indicator matches largest increase of the year

The Macdonald-Laurier composite leading index rose 0.2 per cent in April, matching its gain in March, although manufacturing numbers were still slightly sluggish.

Four of the nine components advanced, with the pattern of gains and losses the same as the month before, said Philip Cross, Macdonald-Laurier Institute (MLI) research coordinator and former chief economic analyst at Statistics Canada.

“As economic growth surpassed expectations in the first quarter, this suggests that the economy has shrugged off the turbulence related to sequestration in the US and Cyprus in the EU, and is poised to strengthen in the second half of the year,” he said.

Cross said the U.S. leading indicator consistently has grown slightly faster than the Canadian leading indicator to date this year, advancing 0.4 per cent in April.

“The U.S. economy has received a boost from the clear signs of a turnaround in its housing sector, which has made lumber Canada’s fastest growing export,” he said.

Commodity prices also received a boost from higher lumber prices, along with natural gas, another long-suffering industry. The 1.4 per cent increase in commodity prices was the fastest of any component.

Housing remained the weakest component, down 0.9 per cent for its eighth straight decline.

“Housing starts were the major source of retrenchment, as sales of existing homes have leveled off. Spending on other big ticket items, such as autos, remains firm,” Cross said.

Manufacturing stayed sluggish, he said. The average workweek in factories shrank for the fifth consecutive month, while new orders edged down 0.2 per cent.

Elsewhere, two of the three financial market components edged up. Claims for employment insurance dipped, as unemployment continued to decline slowly.