U.S. slowdown will weigh on Canadian growth

The Composite Leading Index inched down 0.2 points in May, its first decrease in three months. The index is a new Conference Board of Canada economic measure that tracks short-term indicators of the economy.

“The drop in the indicator suggests a weaker outlook for the Canadian economy,” says Matthew Stewart, associate director of National Forecasting with The Conference Board of Canada.

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“Labour market weakness persisted and business investment shows no signs of picking up. In addition, economic growth may be slowing in the U.S., which will be a key factor for Canadian economic growth in the coming months.”

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Highlights

• Five of the index’s nine components improved, while four deteriorated.
• Industrial and commercial building permits fell for a third consecutive month in May, signaling that the Canadian business sector is unlikely to increase investment in the near future.
• Industrial and commercial building permits, which signal future building activity, fell for the third consecutive month in May, underscoring recent data suggesting Canada’s business sector is hesitant to invest.
• The average workweek experienced its largest monthly decline in over two years and employment insurance claims skyrocketed, both of which could spell trouble for hiring in the coming months.
• The Conference Board’s leading economic index for the United States also fell in May to 123.7, suggesting a slowdown in economic growth.
• On a more positive note, the energy price index saw a significant increase as crude oil prices continued to climb from their lows in February.
• The stock market also saw gains, and the interest rate spread narrowed again, suggesting lenders are more optimistic about overall economic conditions.

Read: Growth outlook downgraded to 1.4%: Conference Board

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.