Canadian Leading Indicators, March 2010 Results

Summary:

The Canadian Composite Index of Leading Indicators rose one per cent in March. The sources of growth continued to shift away from housing, with orders for manufactured goods (durables) experiencing the greatest monthly increase of all index components. March was the 10th straight month the index was in positive territory.

Analysis:

The March leading indicator release added further credence to the argument that economic recovery in Canada has become more widespread and continued at an above-average pace in the first quarter. In the second half of 2009, the housing market was the key contributor to a consumer-led recovery. This changed in the first quarter of 2010, with manufacturing activity increasing markedly, with goods being produced for the domestic market and for export to the US and other countries. This included increased automobile and parts manufacturing, which is especially important to the Ontario economy. It is important to note, however, that slower growth in the housing component masks the fact that demand for resale housing was at record levels in the first quarter. Furthermore, the positive impact of strong home sales in the second half of 2009 and first quarter of 2010 is evident in the continued growth in the furniture and appliance sales component of the index. As people move into their newly purchased homes, they generally make these types of purchases. A recent Canadian Real Estate Association (CREA) study found that every existing home sale in Ontario results in $46,400 worth of additional spending

SOURCE: STATS CAN