A new economic indicator suggests Canada will see very slow, steady growth this year – but no recession.
The Ottawa-based Macdonald-Laurier Institute has started a monthly leading economic indicator, which aims to give insights on the future course of the Canadian economy.
Other countries, including the United States and Australia, have leading indicators, which incorporate several gauges of economic activity meant to give advance warning of recessions or upturns. Statistics Canada stopped producing its leading indicator in May amid budget cuts at the agency.
The new Canadian leading economic indicator rose 0.1 per cent in August, after four straight months of 0.2-per-cent gains.
"The slow, steady growth of this indicator suggests the Canadian economy will avert a downturn in 2012," the institute said in a press release Thursday.
The indicator will provide "as much as six months advance warning of significant changes in Canada's economic performance," said Philip Cross, the institute's research and editorial co-ordinator, and Statscan's former chief economic analyst.
The new index, revised from Statscan's measure, tracks nine components ranging from financial markets to housing, manufacturing. It removes some old indicators and adds new ones, including commodity prices and employment insurance claims.
It's too early to assess the accuracy of the new index, nor whether economists will put much stock in it. But it comes amid considerable uncertainty about the direction of the economy – which might well mean more appetite for any crystal balls about the future.
"Predicting the economy is a lot like predicting the weather to most people," Mr. Cross said. "If there is healthy growth, it is human nature to expect continued growth. But business cycles change just as the weather does."