Stronger short-term outlook for Canada, says Conference Board

Canada’s in line for a slight acceleration in economic growth six months from now, says the Conference Board of Canada based on readings of its Composite Leading Index. That index increased by 0.9 points to 109.1 in June.

In June, there was a pickup in industrial and commercial building permits, says the Conference Board, which bodes well for building construction in the closing months of the year. “[That] could signal the long-awaited turnaround in business investment,” says Pedro Antunes, deputy chief economist of The Conference Board. “However, [this] good news was partially offset by more apprehensive credit lenders, and a modest decline in consumer confidence.”

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Overall, four of the index’s nine components improved, while two deteriorated and three saw little change. In addition to the increase in industrial and commercial building permits, employment insurance claims fell sharply in June–suggesting an improved labour market.

Meanwhile, the energy price index showed another improvement in the month as crude oil prices continued their slow and steady climb in June, from the sub-US$30 levels seen earlier this year. New orders for durable manufactured goods also experienced decent gains.

On the other hand, the interest rate spread widened in June after narrowing in two consecutive months. This suggests apprehension in credit markets.

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Additional data

The Conference Board’s Index of Consumer Confidence saw a halt in its momentum in June, falling two points. That means consumers were more pessimistic regarding future financial conditions than they had been in May, which could hurt consumption spending in the coming months.

The S&P/TSX Composite Index was virtually unchanged in June, but is faring well, adds the Conference Board.

The average workweek also flattened in June, following its largest monthly decline in over two years. This component has remained below its 2014 average throughout much of the last year, a sign of the weak employment numbers seen since the collapse in oil prices.

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