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Key indicators of Canada's economic performance were stronger than expected last month

OTTAWA -- Key indicators of Canada's economic performance were stronger than expected last month, posting the biggest gains in more than seven years, as the country showed signs of emerging from recession.

Statistics Canada said Thursday its composite leading index rose 1.1% in August, after a revised increase of 0.6% in July. Most economists had expected a 0.5% rise last month.

"The increase was the largest since April 2002," the federal agency said. "Growth in the leading index usually only exceeds 1% early in the recovery from a downturn."

Eight of the 10 components of the index were higher in August, up from five the previous month.

"Overall, this is a great report and underpins expectations that the Canadian economy is developing traction," Charmaine Buskas, senior economics strategist at TD Securities.

The housing component of the index increased 3.1% in August, adding to the big gains in June and July -- marking the "strongest three months of growth since the spring of 1991," Statistics Canada said.

"The upturn that began in existing home sales in March was reinforced by higher housing starts over the summer," it said. "Consumer spending for other durable goods also continued to expand, even before auto sales rose sharply in July."

The S&P/TSX stock-price component rose for a fifth straight month, gaining 4.3% in August, while the measure of new orders for durable goods jumped 8.1% -- a record monthly increase coming after seven straight declines.

Canwest News Service

TABLE -- Leading indicators (% change August from July):

Total +1.1

Housing index +3.1

Business and personal services employment -0.2

S&P/TSX stock price index +4.3

Money supply +0.8

U.S. Conference Board leading indicator +0.7

Average workweek (hours) +0.3

New orders, durables +8.1

Shipments/inventories of finished goods +0.015

Furniture and appliance sales -0.2

Other durable goods sales +0.5

Source: Statistics Canada
Financial Post Published: Thursday, September 17, 2009

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