Okay, we know that David Dodge was going to be upbeat anyway. When our central bank governor gets up to speak in New York Wednesday afternoon, he's going to do his best to highlight all that's good about our economy and gloss over the not-so-good.
Luckily, there's nothing to gloss over when it comes to the Canadian composite index. In fact, if you believe the signals it is sending, it's good times ahead for Canada.
According to Statistics Canada, the Canadian composite index rose by 0.9 per cent in January. That's its fourth increase in a row, and above the market's expectations of a rise of 0.3 per cent. Better still, the seven of the 10 components that make up the index were up during the month. The housing components of the index, as well as the one relating to U.S. growth, led the climb.
Of course, some would say you have to view any leading index with a healthy degree of skepticism.
The Canadian composite index, like the one relating to the U.S. economy, is meant to foreshadow the direction of the business cycle. If the index goes down for several months, you generally see growth ahead. If it slumps, you may see recession. Trouble is the track records have not exactly been flawless. In the United States, the joke is that the U.S. leading indicator has forecast 10 of the last seven recessions. And in Canada too, false signals have not been unknown.
So savvy observers of the Canadian economy may want to look a little wider. Savvy currency traders are waiting not just for the Dodge speech, but for reports on Canadian retail sales and trade, still to come. There's not much on the U.S. agenda this week, so really it's all about us.
Sell, sell, sell Mr. Dodge.
Stay tuned.