Although the economic news on the Canadian economy is definitely more upbeat than it was three months ago, it is still mixed.

This assessment is reinforced by a number of recent leading indicators and outlook surveys including the OECD Composite Leading Indicator (CLI), the U.S. Index of Leading Indicators, the U.S. Purchasing Managers Index as well as the latest Manpower Employment Outlook for Canada.

First, from an international perspective, the latest (April) Composite Leading Index for the OECD's 29 member countries increased by 0.5 points following a 0.1 point increase in March. However, on a year over year basis, the OECD CLI was still down 8.3 points.

According to the OECD, it is still too early to assess whether these positive movements in the CLI indicate the beginning of a sustained increase in economic activity. However, they were encouraged by the fact that there appeared to be "possible" cyclical troughs in Canada, China, the United Kingdom, France and Italy.

Closer to home in the U.S., the Conference Board Leading Economic Index for the U.S. increased by a solid 1% in April, its first increase since June of 2008.

Also, the Institute of Supply Management's (ISM) Purchasing Managers Index (PMI) for manufacturing increased by 2.7 percentage points to 42.8% in May. This was its fifth consecutive increase and according to the ISM, a PMI in excess of 41.2 percent over a period of time generally indicates an expansion of the overall economy.

Finally, although there are signs of stronger housing demand and stabilizing domestic demand in Canada, the just released Manpower Outlook Survey for third-quarter 2009 indicated that companies' hiring plans over the next three to six months were little changed or possibly weaker than they were in the second quarter.

Looking forward, while there are definite indicators that fundamental drivers of the Canadian economy are starting to improve, it will probably take until well into the third quarter until there is clear evidence that an economic recovery is underway.

Composite Leading Indicators — All OECD Countries vs Canada

Data source: OECD/Chart: Reed Construction Data — CanaData