Arrow pointing up for Canadian economy at end of 2016: MLI Leading Economic Indicator

Philip Cross

Philip CrossLeading Economic Indicator sees its largest monthly advance in six months, writes author Philip Cross

OTTAWA, Feb. 2, 2017 – The Canadian economy closed 2016 with a bang.

The Macdonald-Laurier Institute’s composite leading index rose by 0.6 percent in December, its largest monthly advance since June’s 0.7 percent hike, according to Leading Economic Indicator author Philip Cross.

The index has posted steady growth in the second half of 2016, after 20 months of little or no growth in the wake of the slump in oil prices late in 2014.

This upturn signals a return to annual growth of about two percent, after the extended slump related to the contraction in the oil industry lowered year-over-year growth to about 1 percent early in 2016, and below 1 percent in 2015.

“While the worst may be past for the oil sector, manufacturing exports and business investment remain a damper on growth”, writes Cross.

To learn more about the leading economic indicator, click here.

The leading index is designed to signal an upcoming turn in the business cycle, either from growth to recession or from recession to recovery, six months in advance, with an error rate of less than five percent. It does so by monitoring what businesses and households have actually committed to in terms of future spending and production in the most cyclically-sensitive sectors of the economy. It also incorporates global influences such as the direction of the US economy and the broad thrust of monetary policy.

The index is available on Bloomberg and is intended for journalists and analysts who follow the macro performance of the Canadian economy. Quarterly economic analyses by Cross, based on the results of the indicator, will appear on the MLI website.


Philip Cross is a Munk Senior Fellow with the Macdonald-Laurier Institute. He previously served as the Chief Economic Analyst for Statistics Canada, part of a 36-year career with the agency.

The Macdonald-Laurier Institute is the only non-partisan, independent national public policy think tank in Ottawa focusing on the full range of issues that fall under the jurisdiction of the federal government.

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