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The composite leading index fell 0.4% in October after a 0.3% drop in September. However, most of the decline originated in the stock market. Excluding the stock market, the index edged down 0.1% after a 0.2% decline in September.
The stock market retreat in September accelerated in October, when the unsmoothed version fell 17.2%. This was the fourth largest monthly drop ever, exceeded only by those in March 1980, October 1987 and August 1998. It is noteworthy that two of these three decreases were not accompanied by declines in most other components of the leading index and not followed by a recession.
Excluding the stock market, four components fell, three rose and two were unchanged. Consumer spending remained the strongest sector. Demand for both furniture and appliances rose steadily. Auto sales rebounded in September, and remained ahead of the level a year earlier. This is in stark contrast with the steepening slide in US sales, reflecting a stronger labour market in Canada and less disruption in the flow of credit. The housing index fell for a fifth straight month due to slumping home sales, while housing starts remained at a high level.
New orders for manufactured goods fell 1.5%, as export demand weakened. The ratio of shipments to inventories was stable, as firms cut stock levels at the same pace as their sales decreased.
The leading indicator in the United States slowed its rate of descent. This moderation originated in the yield curve and the money supply, reflecting the substantial stimulus from monetary policy in response to the rapid deterioration in the US economy.
Available on CANSIM: table 377-0003.
Definitions, data sources and methods: survey number 1601.
This release will be reprinted in the December 2008 issue of Canadian Economic Observer, Vol. 21, no. 12 (11-010-XIB, free). For more information on the economy, consult the Canadian Economic Observer.
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).
