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A construction worker works to close an open steam vent in downtown Toronto on Friday November 29, 2013 .
A construction worker works to close an open steam vent in downtown Toronto on Friday November 29, 2013 .
(Chris Young/CP)

This leading indicator predicts the economy will soften

Canadian gross domestic product for the third quarter was reported well above economist expectations Friday but an index of leading economic indicators suggests the party may be short-lived.

Domestic economic growth came in 0.2 per cent ahead of estimates at 2.7 per cent, but that’s the past. The MacDonald Laurier Institute Leading Indicator (MLI), developed by former StatsCan economist Philip Cross, uses a series of economically-sensitive measures to predict future activity. The chart below shows the index’s considerable success at predicting economic growth rates.