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The composite leading index fell by 0.7% in November, its third straight retreat and the largest since January 1991. The decline was dominated by a large drop in the stock market and in the housing index. The other eight components were about evenly balanced between increases and decreases.
Stock market prices continued to slump in November, the culmination of their worst three-month loss on record back to 1952. Metals suffered the largest declines as global demand tumbled.
The housing index turned down by 5.9%. This reflected both a sudden retreat in existing home sales in the autumn and a drop in housing starts in November. This was the largest decline for the housing index since a similar drop in 1995.
Consumer spending remained supportive of growth. Sales of both furniture and appliances and other durable goods continued to advance in October. However, preliminary data point to lower auto sales in November, at the same time as employment turned down.
The manufacturing indicators remained steady, despite the deepening slump in the US economy. New orders were buoyed by gains in aerospace. Firms were quick to cut production as sales slowed, preventing a decrease in the ratio of shipments to inventories in the last two months. Firms also trimmed the workweek in factories, and laid off workers in November.
The money supply posted the largest increase of any component. This is the most obvious difference between the current slowdown and previous episodes in 2001, 1990, and 1981, when the money supply stalled or contracted. The leading indicator for the United States also showed large gains in the components related to monetary policy. This reflects the substantial stimulus coming from central banks in North America, along with most major nations around the world, in response to the squeeze in credit availability.
Available on CANSIM: table 377-0003.
Definitions, data sources and methods: survey number 1601.
This release will be reprinted in the January 2009 issue of Canadian Economic Observer, Vol. 22, no. 1 (11-010-XWB, 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.
