World Economy

Canada Struggling

Canada StrugglingCanada Struggling

A new index that detects early trends suggests the recent sharp recovery in Canada’s economy will likely fade.

The Macdonald-Laurier Institute Leading Indicator was unchanged in March, the fifth-straight month the measure failed to increase. It’s the second-worst stretch since the 2008-2009 recession, and shows the commodities slump is still inhibiting a recovery, Bloomberg reported.

“Falling commodity prices remained the main source of weakness in Canada’s economy, while the transition to growth led by the manufacturing and household sectors remains elusive in an environment of subdued global growth,” Philip Cross, a research analyst at the MLI, said in a statement.

The year started well, with Canada’s economy expanding 0.6% in January, the most since 2013. On an annualized basis, GDP probably grew at a pace of more than 3% in the first quarter, outperforming most G20 countries, as exports surged. The rebound has helped fuel a 10% gain in the Canadian dollar this year.

The lackluster performance of the leading indicator “suggests the January increase in GDP was driven by transitory factors,” Cross said, echoing a Bank of Canada prediction.

Statistics Canada stopped publishing its composite leading economic indicator in 2012 as part of a cost-cutting campaign and Cross, who left the agency that year, is responsible for its revival.

The leading indicator is made up of ten components which track the short term course of the economy, and can signal changes in its future strength. In March, just four of 10 components increased, led by housing and money supply measurements. Commodities and consumer confidence were the biggest decliners. The gauge is up 0.4% from the previous year.