Calgary Herald

Buoyant consumers willing to spend

- GORDON ISFELD FINANCIAL POST

Despite gnawing concerns over heavily indebted households, Canadians still appear ready to keep on spending.

In fact, they seem more confident now than earlier this year that economic growth is picking up, and that their jobs are more secure, according to surveys released Monday.

Consumers also feel more secure about their personal finances going into 2014 and that the still-hot real estate market will avoid a crash, the new data show.

Less obvious is whether Canadian businesses will finally get behind the wheel of the economy and increase their spending and expand markets, as has long been anticipate­d since the recession.

For now, though, households look set to continue in their role as the main provider of that growth.

And they seem more confident now than in nearly three years that growth is strengthen­ing, according to The Investors Group-Harris Decima Index.

“Consumer confidence rose throughout 2013 in every region of the country,” said Allan Gregg, chairman of Harris Decima.

“Perhaps as importantl­y, regional difference­s in outlook also became less pronounced, suggesting that all parts of the country — although somewhat less so in Quebec — are sensing that the economy is on the rise and that better times are ahead.”

The consumer index, which showed confidence in the final three months of 2013, was at a high not seen since the first quarter of 2011, with residents in Western Canada being the most upbeat.

Overall, the positive sentiment of Canadians across the country improved steadily during the year, the survey found, pushing the index up to 84.4. The reading has improved since the beginning of 2013, starting at 77.6 in the first quarter, and rising to 79.7 in the second three-month period and then to 81.2 in the third quarter.

Monday’s survey is based on 2,018 consumer responses between Nov. 21 and Dec. 1.

Meanwhile, a separate survey released Monday found Canadians are increasing­ly optimistic about job prospects and the health of the real estate market.

The Bloomberg Nanos Canadian Confidence Index rose to 58.4 for the week ended Dec. 27, up from 57.8 a week earlier. That also surpasses the average reading for 2013 of 57.3, and the 52.9 level at the end of 2012.

Nanos said those consumers who expect the economy to improve over the next six months rose to 20.5 per cent last week from 20.3 per cent. At the same time, respondent­s who feel secure — or somewhat secure — about their employment status remained steady at a reading of 66.4 per cent.

The weekly survey of 1,000 people showed fewer Canadians — 24.4 per cent — feel worse off financiall­y now than they did at the end of last year, when the reading was 36.8 per cent.

As for the real estate market, 34.6 per cent of respondent­s believe the value of homes in their neighbourh­ood will increase over the next six months. That’s steady but down slightly from 34.8 per cent in the previous survey.

Consumer spending has been relied on to lift the Canadian economy after the 2007-08 downturn, assisted by rock-bottom interest rates that elevated household debt to record levels and fired the housing market to bubble-bursting highs. Home sales and prices have continued to defy prediction­s of a cooling, while growth in consumer debt has slowed. Both factors remain the biggest risks to the economy, according to the Bank of Canada.

The central bank and the federal government maintain that as the global economy improves — especially in the United States — companies will start leading growth in this country through increased spending and expansion in markets outside of Canada.

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