The composite leading index rose by 0.4% in February, comparable with the revised increases in December and January, Statistics Canada reported this morning.

Six of the 10 components advanced, one more than in January, as the money supply turned up.

According to StatsCan, the sources of strength and weakness have remained the same over the last three months. Manufacturing led the gains, after lagging behind most of last year. Household demand was mixed.

After being frozen by a cold snap in January, StatsCan said household demand was spotty in February, as employment slowed and consumer confidence slumped.

Housing and sales of durable goods both trended down for a third straight month. The agency added that demand will receive a boost from sharply lower energy bills and another drop in interest rates early in March. It said that some recovery was already evident in February auto sales and housing starts.

The agency said the increase in investment intentions for 2004 was one of the main reasons that new orders for manufactured goods posted one of their best gains in two years. Higher business spending was also evident in rising employment in business services, which offset a drop in the personal services.

In its news release, StatsCan noted the U.S. leading indicator picked up slightly from 0.3% to 0.4% growth. Manufacturing was one the main reasons for this improvement, led by investment and autos. U.S. factory output rose 1% in February, an encouraging trend for Canadian exports of industrial materials.