National Post (National Edition)
Consumers more upbeat than top executives
Pair of polls reveal competing sentiments about markets
OTTAWA • Two surveys, two different outlooks.
Speak to Canadian consumers and you get a pretty positive spin on the economy. In fact, they seem more upbeat at this point than even three months ago.
Talk to business executives — the people who are expected to create the jobs necessary to power the country’s growth — and the outlook doesn’t appear as rosy.
For instance, a regular quarterly business survey of top-level professionals shows economic pessimism has overtaken optimism for the first time in three-and-a-half years.
“That is to be expected,” said Kevin Dancey, president and CEO of Chartered Professional Accountants of Canada (CPA), given that uncertainty about oil prices is the No. 1 concern of those surveyed.
CPA’s poll for the first quarter of 2015 found overall economic pessimism was running at 30 per cent, up from 19 per cent in the final three months in 2014, and seven per cent in third quarter of that year.
Optimistic responses on the economy amounted to only 23 per cent in the first quarter of 2015, down from 33 per cent in the previous quarter and 48 per cent in the third quarter of 2014.
Those findings are based on responses from 656 business people in senior positions in Canada.
The CPA said the last time pessimism scored higher than optimism was in the fourth quarter of 2011, when negative views totalled 23 per cent of the survey and 20 per cent were still somewhat positive.
While oil is currently the top worry for now, there are others eating away at Canada’s economic outlook.
“Recent retail closings and lingering economic uncertainty, both at home and abroad, are other factors likely contributing to the surge in pessimism,” said CPA’s Dancey. “It’s also important to recognize that almost half of the respondents are taking a wait-and-see approach.”
The outlook of consumers, meanwhile, is more upbeat than that of business professionals, according to the closely watched Bloomberg Nanos Canadian Confidence Index, which edged up to 56.8 last week from 56.2 in the previous reading. It was the highest reading since 55.3 recorded three months ago.
The Nanos index — based on responses about personal financial well-being, job security and expectations for the economy — hit a low of 43.28 in December 2008 and reached a high of 62.92 in December 2009.
The Nanos index indicates consumers are growing more confident that the economy will stabilize over the next six months, with the percentage of respondents expecting a weaker performance falling to 31.7 per cent — the lowest level since December and off the 47-per-cent high recorded in February.
Those Canadians who feel their jobs are “somewhat secure” rose last week to 72.3 per cent, the highest reading since 2011, Nanas said. Those who feel “somewhat concerned” about their employment situation declined to 12.4 per cent.
As for house prices, Canadians are somewhat divided on where the market is headed.
“Expectations for a recovery in Canadian economic activity are based in part on the health of the U.S. economy,” said Robert Lawrie, at Bloomberg Economics.