Consumer confidence in 3-month slide
The mood of many Canadian consumers has taken a decidedly dark turn in recent months.
Confidence in their personal finances and prospects of finding a job have dimmed — with those living in the Prairies and Ontario seemingly the most discouraged.
Even so, there are Canadians elsewhere in the country who still appear to be plodding along and hoping for best.
The Conference Board of Canada’s latest survey, released Monday, showed a continuing three-month decline overall in consumer optimism — coming during a time of an increasingly uncertain economic environment globally and an inconsistent performance in this country.
The Ottawa-based think-tank said its consumer confidence index fell to a reading of 82.7 in November, down 1.4 points from October and 5.2 points from September.
“But the drop in confidence was not uniform, as this month’s de- cline was driven in large part by a drop in the Prairie region’s index,” said Todd Crawford, the Conference Board’s senior economist. “Ontario was the only other region to register a decline, while the other regions all rebounded from October’s poor showing.”
Consumer sentiment in the Prairies dropped 13.6 points in the November survey, while Ontario fell by three points. The biggest improvement was in Atlantic Canada, where optimism was up 10.7 points, and in Quebec, which rose 4.9 points. British Columbia’s reading increased 2.4 points.
But Canadians “continue to be worried about future job prospects,” Crawford said. “There are still more respondents who expect the Canadian economy to shed jobs going forward than those who expect more jobs.”
In its latest survey, conducted between Nov. 6 and 17, the board found 21.5 per cent of respondents said they thought there would be fewer jobs six months from now — that’s up 1.2 percentage points from the October poll.
The Conference Board survey also showed only 18 per cent of consumers believe they are better off financially than they were six months earlier, down 3.7 points from the previous survey and marking the first year-over-year decline since mid-2013.
Surprisingly, the Conference Board survey showed most Cana- dians continue to think that it’s a good time to make major purchases, such as cars or homes. The positive response to that question was 42.6 per cent, up from 41.4 per cent in October.
One possible explanation for buying optimism is the recent drop in global oil prices, and the subsequent downward pressure on gasoline prices, which is freeing up more money for Canadians to purchase other items.
Consumers still willing to spend is encouraging for the economy, which is still relying on household spending to backstop the bulk of growth as a rotation toward business investment remains a work in progress.
That has been a troublesome sign since the 2008-09 recession, despite the depreciation of the Canadian dollar and prodding by the Bank of Canada to get companies expanding production and widening export markets.
The central bank froze its benchmark lending rate at one per cent in September 2010, and borrowing costs are not expected to begin thawing until after the U.S. Federal Reserve raises its key rate, likely around mid-2015.
On Wednesday, the Bank of Canada will issue its latest interest rate decision, and policy-makers will have had a lot of data to crunch since their previous meeting. Some is good, such as improving but possibly still inconsistent growth in the economy and employment; and some worrisome, like above-target inflation and the ongoing slide in oil prices that is cutting into corporate and government revenue.