Markets hit Canada's leading indicators

Financial Post · Oct. 19, 2011 | Last Updated: Oct. 19, 2011 10:04 AM ET

OTTAWA — A wide gauge of Canada’s economic performance declined in September, after months of relatively flat readings, reflecting weaker performances by the manufacturing sector and the stock market.

Statistics Canada said Wednesday its index of leading indicators slipped 0.1% last month during the month, compared to analysts’ expectations for a 0.1% increase.

Six of the 10 components of the index managed gains in September, the same amount as August, the federal agency said. “The weakness in the index was concentrated in the stock market and the manufacturing sector, largely offsetting the rebound in the housing sector,”it said in Wednesday’s report.

Scotia Capital economists Derek Holt and Karen Cordes Woods said the index “registered a zero print in June well before gloomy talk accelerated, a paltry gain of 0.1 in July, and then another flat print in August.”

“Readings like that suggest a sudden sharp loss of forward momentum into Q3-Q4,”they said.

Statistics Canada said all three manufacturing components fell in September. New orders were down 0.7%, after 3.4% increases in the previous two months, while shipments of finished goods declined 0.025% and the average hourly workweek fell 0.5%.

“While sales rebounded after two straight declines, the ratio of shipments to inventories continued to fall, reflecting rising stocks of finished goods,” it said.

The stock index fell 3.5% amid market turmoil caused by global economic uncertainty.

Meanwhile, the housing component of the index rose 1.2% in September, the biggest gain since the spring. That helped lift furniture and appliance sales by 0.4%, the agency said.