Canadian economy powering ahead, latest data show

Fri Jun 18, 2010 11:27am EDT
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By David Ljunggren

OTTAWA (Reuters) - Canada's composite leading indicator, a broad measure of how the economy is performing, rose for a 12th consecutive month in May in another sign of how well the country is recovering from the global financial crisis.

The indicator advanced by 0.9 percent from April, Statistics Canada said on Friday, a larger move than the 0.7 percent increase expected by market operators.

Of particular note was the relatively strong performance by the hard-hit manufacturing sector, which has had trouble dealing with the high Canadian dollar, weak U.S. markets and greater foreign competition.

All three manufacturing indicators rose. New orders were up by 4 percent, the fourth consecutive monthly increase, the average work week posted its first increase since September 2009, while the ratio of shipments to inventories posted its 10th gain in a row.

"The indicator has been firmly in expansionary territory since early last summer. That is supportive for second-quarter GDP growth," said Derek Holt and Gorica Djeric of Scotia Capital Economics.

The Canadian dollar strengthened slightly and by 11:05 am (1450 GMT) was at 1.0246 to the U.S. dollar, or 97.60 U.S. cents, up from C$1.0290, or 97.18 U.S. cents, before the figures were released.

Bank of Canada Governor Mark Carney said in a speech on Friday that Canadian economic growth would most likely be the strongest among the Group of Seven leading industrialized nations over the next two years.

The central bank raised its key interest rate from record lows on June 1 but this week it warned markets against expecting another hike on July 20, citing the unpredictable global economy.   Continued...