October 30, 2012 / 10:23 AM / 6 years ago

Canada leading indicator rises 0.2 pct in September

OTTAWA (Reuters) - A new Canadian composite leading indicator showed a rise in September for the second straight month, suggesting Canada’s economy would continue to expand despite global headwinds.

The index, launched earlier this month by a think tank called the Macdonald-Laurier Institute, rose 0.2 percent in September following a 0.1 percent increase in August. The index had decelerated during the first half of the year.

Strength in the financial components of the index propelled the increase while the housing index was the weakest factor, the institute said in a release.

The money supply grew, stock prices on the Toronto Stock Exchange steadied after months of declines, commodity prices firmed and the spread between interest rate for private and public borrowers fell to its lowest level in two years.

The housing index fell 2.5 percent, dragged down by lower housing starts and existing home sales.

Four of the nine components in the index increased in September, three were unchanged and two declined.

The institute created the new index to try to fill a void left by the cancellation by the government agency Statistics Canada of its composite leading indicator in May.

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 David Gregorio

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