The economic indicators used to gauge the performance of an economy and its outlook are the same across most nations. What differs is the relative importance of certain indicators to a specific economy at various points in time (for instance, housing indicators are closely watched when the housing market is booming or slumping), and the bodies or organizations compiling and disseminating these indicators in each nation.
Below are the 11 key economic indicators for Canada, the world’s tenth-largest economy.
- The economic indicators that gauge the performance of an economy are the same across all nations; what differs is the weight and importance of each indicator.
- Canada is the world's tenth-largest economy as measured by gross domestic product (GDP).
- The primary key indicators for the economy of Canada are GDP growth, employment change, unemployment, the consumer price index (CPI), international merchandise trade, the national bank house price index, house starts, house sales, retail sales, building permits, the Ivey purchasing manager's index, and the Conference Board's consumer confidence index.
- The Ivey PMI measures the monthly variation in economic activity, as indicated by a panel of purchasing managers across Canada.
- The national bank house price index was developed by Teranet and the National Bank of Canada and represents average home prices in Canada’s six largest metropolitan areas.
Statistics Canada, a national agency, publishes growth statistics on the Canadian economy on a monthly and quarterly basis. The report shows the real gross domestic product (GDP) for the overall economy and is broken down by industry. It is an accurate monthly/quarterly status report on the Canadian economy and each industry within it.
Employment Change and Unemployment
Key data on the Canadian employment market, such as the net change in employment, the unemployment rate, and participation rate, is contained in the monthly Labour Force Survey, released by Statistics Canada. The report contains a wealth of information about the Canadian job market, categorized by demographic, class of worker (private sector employee, public sector employee, self-employed), industry, and province.
Consumer Price Index
Statistics Canada releases a monthly report on the consumer price index (CPI) that measures inflation at the consumer level. The index is constructed by comparing changes over time in a fixed basket of goods and services purchased by consumers. The report shows the change in CPI monthly and over the past 12 months, on an overall and core (excluding food and energy prices) basis.
International Merchandise Trade
This monthly report from Statistics Canada shows the nation’s imports and exports, as well as the net merchandise trade surplus or deficit. The report also compares the most current data with that for the preceding month. Exports and imports are shown by product category, and also for Canada’s top 10 trading partners.
Teranet: The National Bank House Price Index
This composite index of house prices across Canada was developed by Teranet and the National Bank of Canada and represents average home prices in Canada’s six largest metropolitan areas. A monthly report shows the change in the index monthly and over the past 12 months, as well as monthly and 12-month changes in Canada’s six and 11 largest metropolitan areas.
The Conference Board’s Consumer Confidence Index
The Conference Board of Canada's Index of Consumer Confidence measures consumers' levels of optimism in the state of the economy. It is a crucial indicator of near-term sales for consumer product companies in Canada, as well as an indicator of the outlook for the broad economy since consumer demand comprises such a significant part of it.
The index is constructed on the basis of responses to four questions by a random sampling of Canadian households. Survey participants are asked how they view their households' current and expected financial positions, their short-term employment outlook, and whether now is a good time to make a major purchase.
Ivey Purchasing Managers Index (PMI)
An index prepared by the Ivey Business School at Western University, the Ivey PMI measures the monthly variation in economic activity, as indicated by a panel of purchasing managers across Canada. It is based on responses by these purchasing managers to a single question: "Were your purchases last month in dollars higher, the same, or lower than in the previous month?"
Canada's expected gross domestic product (GDP) for 2021.
An index reading below 50 shows a decrease; a reading above 50 shows an increase. Panel members indicate changes in their organization's activity over five broad categories: purchases, employment, inventories, supplier deliveries, and prices.
The building permits survey conducted monthly by Statistics Canada collects data on the value of permits issued by Canadian municipalities for residential and non-residential buildings, as well as the number of residential dwellings authorized. Since building permit issuance is one of the very first steps in the process of construction, the aggregate building permits data are very useful as a leading indicator for assessing the state of the construction industry.
Canada Mortgage and Housing Corporation (CMHC) issues a monthly report on the sixth working day of every month, showing the previous month's new residential construction activity. The data is presented by region, province, census metropolitan area, and dwelling type (single-detached or multiple-unit). The indicator, composed of housing starts and completions, is an important gauge of the state of the Canadian housing market.
This key indicator of housing activity is compiled by the Canadian Real Estate Association (CREA) and is based on the number of home sales processed through the MLS (Multiple Listing Service) Systems of real estate boards and associations in Canada. The monthly report from the CREA shows the change in home sales across Canada, as well as for major markets, from month to month. The report also includes other important housing-related information, such as the change (as a percentage) in newly listed homes, the national sales-to-new listings ratio, months of housing inventory, the change in the MLS Home Price Index, and the national average price for homes sold within the month.
Statistics Canada releases a monthly report on retail sales activity across Canada, with changes shown on a month-over-month and year-over-year basis. The headline number shows the percentage change in national retail sales on a dollar basis; the percentage change in volume terms is also shown. The retail sales figures are shown by industry and for each province or territory, and provide insights into Canadian consumer spending.
What Are the Main Drivers of the Economy in Canada?
The main drivers of the Canadian economy are the service industry, the manufacturing industry, and the natural resource industry.
What Is the Economic Classification of Canada?
Canada is classified as a highly-developed mixed economy. It is the tenth-largest country in the world as measured by GDP.
What Are the Main Indicators of the Health of the Canadian Economy?
The main indicators of the health of the Canadian economy are economic wealth, economic disadvantage and hardship, and economic sustainability.
The Bottom Line
The 11 economic indicators briefly described above show the state of key aspects of Canada's economy: consumer spending, housing, manufacturing, employment, inflation, external trade, and economic growth. Taken together, they provide a comprehensive picture of the state of the Canadian economy.