Characterizing Breadth in Canadian Economic Activity

Real growth in gross domestic product tends to be meaningfully higher when a large share of industries and demand components are growing—that is, when growth is broad across many fronts. We present a simple new indicator, the overall breadth indicator (OBI), to measure how widespread economic activity is in Canada, allowing us to place recent data in historical context. The relationship between the OBI and the output gap is strong contemporaneously and one quarter ahead. Beyond that, however, the signal from the OBI is less robust.