Canada's composite leading index rose 0.4 per cent in July, Statistics Canada reported Wednesday.

Small declines in May and June were revised up to no change, the agency also said.

July's increase was the first advance since August 2008, just before the turmoil in global financial markets deteriorated significantly.

A closely watched economic indicator, the index is comprised of 10 cyclical economic components that together represent all major categories of gross domestic product growth. It's seen as an indicator of the economic direction the country is headed in.

Overall, the agency says six of 10 components expanded in July, the most since May 2008.

Just four months earlier, the money supply component was the only one that increased and the overall index fell 1.4 per cent, its fastest rate of decline in the current downturn.

Housing and the stock market continued to post the largest gains, although the stock market leapfrogged ahead of housing with a 5.7 per cent increase.

The upturn in household spending spread from housing to other durable goods, which posted their first advance in over a year.

Not all sectors of household spending were upbeat. Furniture and appliance sales continued to trend down, while personal services pulled down services employment. New orders in the manufacturing sector continued to decline, falling nearly six per cent.

In the United States, the leading indicator remained positive, rising 0.4 per cent for the first back-to-back gain in about two years.