The Canadian economy is in recovery mode according to the latest report on the leading economic indicators from Statistics Canada. The composite leading index grew 0.5% in August, the same rate as in July. These are the two best increases in over a year.

Growth extended to seven of the 10 components, including a significant increase in the financial indicators. The stock market indictor has risen 17% since April.

On the downside, manufacturing continued to weaken, but the blackout in Ontario is partly to blame for that weakness. Excluding manufacturing, the overall index rose 0.8%, the largest since May 2002 when both GDP and employment were growing strongly. An acceleration in new orders for capital goods, up six months in a row, is particularly encouraging for business spending.

All the indicators of household demand accelerated. Housing recorded a fourth straight advance when housing starts rose in response to strong demand in July. The upturn was most pronounced in Quebec, where vacancy rates in some markets hit 10-year lows.

In other economic news, OPEC announced a surprise cut of about 5% in its production quota on Wednesday.

At a meeting at its headquarters in Vienna, OPEC members said the cartel will cut production by 900,000 barrels a day in the fourth quarter of this year. The move would lower OPEC’s production target to 24.5 million barrels per day.

The surprise announcement sent oil prices upwards, as oil ministers had generally downplayed the possibility of a production cut.

The price for November Brent crude oil shot up to US$26.30 a barrel, a gain of 78¢ or 3% from Tuesday.

Asian stock markets finished their Tuesday trading higher. Hong Kong’s Hang Seng index hit a new 15-month high climbing 351.53 points, or 3.2%, to 11,295.89. Expectations of new funds from foreign investors boosted property and banking stocks. Tokyo’s Nikkei average crawled up 27.19 points to 10,502.29.

In London at midday, the FTSE 100 index is up 0.9%, rising 38.4 points to 4,260.1. Frankfurt’s DAX is up by 0.8%, while the Paris CAC40 is up0.7%.

On Monday, the S&P/TSX composite index rose 77.53 points to finish at 7,644.04.

In New York, the major market averages pushed higher as strong earnings from companies such as Morgan Stanley helped offset investors’ lingering concerns about a weak dollar.

The Dow Jones industrial average closed up 40.63 to 9,576.04, having lost 109 points in the previous session.

The tech-heavy Nasdaq composite index gained 27.11 to 1,901.73. The S&P 500 rose 6.22 to 1,029.04.