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OTTAWA (Reuters) - A new Canadian composite leading indicator rose 0.2 percent in October, pointing to continued slow growth in coming months but with manufacturing and exports replacing the housing market as the main source of the expansion.
The gain in October matched a similar rise in September and showed strength in most domestic sectors despite the recession in Europe and uncertainty about the U.S. budget troubles, the Macdonald-Laurier Institute said on Wednesday.
The think tank designed and launched the index this year with the help of former Statistics Canada chief economist Philip Cross after Statscan discontinued its leading indicator.
"The housing sector has turned down, after leading growth in the spring," the institute said in a release.
"However, this softening has been outweighed by a rebound in the manufacturing sector and the stock market, after declines over the summer."
The housing index fell 1.7 percent in October for the fourth straight decline, although it fell less sharply than the 2.7 percent drop recorded in September.
New orders for durable goods rose 1.2 percent thanks to demand for aerospace products and steady gains in autos and housing. The average workweek in the manufacturing sector also climbed 0.3 percent.
The Toronto stock market also gained for the first time in six months as firmer commodity prices boosted share prices in those sectors.
Macdonald-Laurier changed the composition of the index to enable it to predict economic performance further out, and built a series of historic data using the new criteria.
The think tank said that on average the new index signals recessions with a lead time of 7.4 months.
Reporting by Louise Egan; Editing by James Dalgleish