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The growth of the composite leading index was steady at 0.5% in May. In total, 8 of the 10 components rose, the same as in April. The components related to household spending improved markedly, while export demand for manufacturers remained the weakest sector. This is the sectoral pattern of demand to be expected during a period when the exchange rate is appreciating.
Housing led the improvement in household demand. Housing starts jumped to their highest level since the weather-induced surge in January. Buoyant house sales were reflected in the largest increase for furniture and appliance sales since June 2006. Auto demand also rebounded in the spring, leading the turnaround in sales of other durable goods. Consumer services led the growth in services employment. Strong job growth and the booming stock market encouraged household spending.
The outlook for exports and manufactured goods was mixed, reflecting the cross-currents of a rebound in the US economy and the rising exchange rate. New orders for manufactured goods continued to grow steadily, led by computers and electronic products. The recovery of orders so far in 2007 has begun to be reflected in higher shipments, which lifted the ratio of shipments to inventories for the first time since the fall of 2006. The outlook for manufacturing employment remained bleak, however, as firms cut the average workweek in a renewed drive to enhance productivity and competitiveness to cope with the strong dollar.
Available on CANSIM: table 377-0003.
Definitions, data sources and methods: survey number 1601.
For more information on the economy, consult the June 2007 issue of Canadian Economic Observer, Vol. 20, no. 6 (11-010-XWB, free), available from the Publications module of our website. A printed version of the publication (11-010-XPB, $25/$243) will soon be available.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Philip Cross (613-951-9162; ceo@statcan.gc.ca), Current Economic Analysis Group.
Table(s).
