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The Conference Board of Canada’s composite leading index increased by 0.4 percent in March, but much of the gain is due to the end of a long, cold winter. March’s increase is up from a gain of 0.2 percent in January and flat compared to February’s 0.4 percent increase.
Despite the gains in the index, only a small rebound in economic growth is expected, likely a result of the country emerging from of a harsh winter.
“Domestic demand in Canada continues to languish. Both existing house sales and housing starts fell, with housing starts hitting their lowest level in over a year,” said Philip Cross, author of the composite leading index for The Conference Board of Canada. “Employment Insurance claims rose for the second month in a row.”
This is the fourth release of the Canada composite leading index, which sums up the performance of 10 components that track the short-term course of the economy. It signals changes in the business cycle approximately six or seven months in the future.
In a separate report released last week, the Royal Bank of Canada’s Canadian manufacturing purchasing managers’ index rose to a reading 52.9 in April, down slightly from March’s reading of 53.3; a value of 50.0 is considered neutral. The drop in the index since March mainly reflected slower rates of output and new business growth. However, manufacturing employment in Canada rose to the highest level in five months. The latest rise in employment levels was the fastest since November 2013, but still slightly weaker than the historical average, according to the report.
The RBC PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in more than 400 industrial companies.