The leading indicator grew by 0.2% in February after downward-revised gains of 0.3% in January and 0.4% in December, Statistics Canada said today.

The government agency said the February easing partly reflected a slowdown in the stock markets and housing after unusually sharp gains in January.

Overall, seven of the ten components increased, one was unchanged and two declined.

Household spending remained mixed. Housing slowed from a sharp upturn in January when unseasonably warm weather gave a boost to housing starts. Furniture and appliance demand remained a pillar of strength, but spending on other durable goods stayed sluggish, notably for autos, which have been weak ever since discount programs expired last autumn.

The stock market pulled back from its record high early in the new year. Energy and mining stocks fell in tandem with prices on commodity markets, which retreated from their record high. The drop was most pronounced for natural gas, where the warmest winter ever in the United States sent prices sharply lower.

The U.S. leading indicator grew by 0.4%, its largest advance in over a year. The U.S. economy appears to be strengthening after real gross domestic product growth slowed from the third quarter (+1.0%) to the fourth quarter (+0.4%), largely due to a number of unusual factors.

Manufacturers continued to grapple with several conflicting issues. The underlying trend of demand remained positive, largely thanks to strong business investment in Canada and exports to the United States. This was reflected in rising new orders and shipments. But margins remained under pressure from rising energy costs and the exchange rate. Firms continued to slash the workweek and jobs in a bid to boost productivity.