The rate of decline of the leading indicator slowed markedly to 0.1% in May, the smallest of nine consecutive declines

Statscan - The shift from a 0.9% drop in April to a 0.1% dip in May was the largest monthly change in the index in either direction since December 1965. The turnaround reflected a 2.6% increase in the unsmoothed index, equalling its largest monthly gain in 30 years.

The largest turnarounds were in the housing and stock markets. The housing index shifted from a decline in April to a 1.0% gain in May, as existing home sales continued to recover rapidly. The stock market rose by 3.2%, led by an upturn in commodity prices as well as financial stocks.

Households remained cautious about spending more, apart from the gain for existing homes. Furniture and appliance sales continued to decline, which may reflect ongoing weakness in sales of newly-built homes. Outlays for other durable goods also fell steadily, despite a levelling off of auto sales. A small gain in personal services drove overall services employment higher.

Manufacturing continued to trend down. Despite steep cuts in output, shipments continued to fall faster than inventories of finished goods. New orders remained weak, especially for exports and capital goods. One encouraging sign for Canadian exports was that the leading indicator for the United States stopped declining, after over a year of steady losses.