There are several reasons to believe that the current slump in the index is not as unsettling as in 2001. Much of the weakness was concentrated in the housing index, where unusually heavy snow storms severely curtailed construction in December. Excluding the drop in housing, the composite index would have been flat in December.

Besides the impact on housing, a snow storm in Eastern Canada during the reference week for the Labour Force Survey also reduced hours worked. This contributed to the sudden downturn in services employment, after 21 straight monthly gains. Consumer spending remained mixed, with increases for furniture and appliances offset by declines for other durable goods. Auto sales were particularly weak, although preliminary data point to a sharp recovery in December.

But there was less ambiguity about the outlook for the US economy. The US leading indicator fell 0.2% for the second consecutive month, led by weakness in housing and consumer confidence. The slowdown in US household demand was reflected in another sharp drop in new orders for goods manufactured in Canada. The ratio of shipments to inventories levelled off, after three straight declines.