The composite leading index rose by 1.1 per cent in August, following a 0.6 per cent gain in July, Statistics Canada revealed Thursday.

Growth in the leading index usually only exceeds 1 per cent in the early stages of recovery from a downturn, the agency noted.

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 a broad indicator of the economic direction the country is headed in.

The increase was the largest since April 2002.

In August, eight of the 10 components contributed to the advance, including manufacturing. That's up from five the previous month.

Improvement in the housing index, consumer spending and stock markets played a role in the index's increase, but new orders for durable goods manufactured in Canada were a key driver, rising 8.1 per cent as summer began.

That's the largest gain on record following marked declines in each of the previous seven months.

Meanwhile, services employment remained on a steady downward trend, falling 0.2 per cent.