The Canadian Press

Bankruptcies tumbled and Canadians were buying more homes and cars this fall as indications mounted that the economy has finally shifted into a higher, forward gear.

Fresh economic data released Tuesday for the October-December quarter still in progress was almost universally positive, and strongly so, say economists.

The most dramatic news had to do with Canadians’ finances. The Office of the Superintendent of Bankruptcy reported consumer bankruptcies fell a record 28.4% in October, although some of fall-off could be attributed to changes in filing costs that persuaded Canadians to declare the previous month.

Also on the positive side was a 3.5% increase in new vehicle sales in October compared with September, and a whopping 73% jump in the sale of existing homes via the Multiple Listing Service in November, putting activity near the pre-recession levels of November 2007.

“As we predicted last April, the rebound in resale housing activity led the overall Canadian economy out of recession,” said Dale Rippinger, president of the Canadian Real Estate Association.

Statistics Canada said Tuesday its composite leading index — a broad indicator of economic activity — rose by 1.3% in November, equalling the biggest move of the past six straight increases.

Also encouraging was that growth was widespread. For the first time in over two years, none of the 10 components that make up the index were negative.

The Bank of Canada also signalled improving conditions, announcing late Tuesday afternoon it was withdrawing some of its extraordinary funding facilities, and making them available monthly rather than bi-weekly. The changes take effect Jan. 19.

The sole down signal involved labour productivity, which fell 0.2%, but that was for the third quarter, when growth was halting.

Taken in conjunction with the previously reported 79,000 jobs gain for November, analysts say Canada’s economy appears to be making up for the disappointing performance of the third quarter, when it eked out a slim 0.4% advance.

“It think the fourth quarter looks quite good and we’ll likely forget those (third-quarter) woes quite quickly,” said economist Eric Lascelles of the TD Bank.

“The question becomes whether we can convert economic growth into consistent job growth because, from there, quite a number of good things naturally fall out.”

Although Canada’s labour market has stabilized from last winter, and November’s gain was the most in 14 months, it has yet to record a sustained period of job growth.

Lascelles said it was normal for an economy coming out of a deep contraction to show uneven growth, but added that the October-December months will be solidly in positive territory.

Given that 2008 saw mostly flat growth, a fourth-quarter advance in the two or three% range annualized would constitute the best performance by the Canadian economy in two years.

Analysts caution, however, that the economy is still a long way from returning to the levels it reached prior to the recession, which hit in October 2008.

And while the latest growth numbers appear solid, they stem from depressed levels.

Overall bankruptcies remain 31.9% higher than a year ago, while home resales and vehicles sales are lower than pre-recession levels.

Business bankruptcies are the only indicator among those released Tuesday that constituted an improvement from the pre-recession levels.

The office of bankruptcies said 7.7% fewer firms had fallen into insolvency as of Oct. 31 than was the case 12 months earlier.