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The composite leading index advanced 0.4% in July after an upward-revised gain of 0.3% in June. Of the 10 components, 6 expanded, one more than in June, while 2 were unchanged and 2 declined. Household spending remained the main source of growth, while manufacturing continued to lag.
Consumer spending on the two durable goods components posted their largest gains in a year. Furniture and appliance sales received a boost from continued strong existing home sales over the summer and a rebound in housing starts. Spending on other durable goods continued to strengthen, underpinned by strong labour market conditions and lower prices for imported consumer goods.
Business spending remained a positive force in domestic spending. Business services drove the growth of services employment. The buoyancy of business investment was reflected in non-residential building permits and the volume of machinery and equipment imports, both of which hit record highs in the second quarter.
Manufacturing remained the weakest sector of the economy. Orders for durable goods and the ratio of shipments to inventories both trended down, although the unsmoothed versions turned up. The slack in manufacturing reflects weak US demand. The US leading indicator was unchanged in July, and has not risen in five months. While understating the underlying strength of the US economy, this correctly reflects the underlying trend of our exports to the US at a time of a rising exchange rate.
Available on CANSIM: table 377-0003.
Definitions, data sources and methods: survey number 1601.
For more information on the economy, consult the August 2007 issue of Canadian Economic Observer, Vol. 20, no. 8 (11-010-XIB, free), available from the Publications module of our website.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Philip Cross (613-951-3627; ceo@statcan.gc.ca), Current Economic Analysis Group.
Table(s).
