Faith in national economy fragile
Nearly one-quarter of Canadians have no spare cash after essential expenses, Nielsen survey finds
Consumer confidence in Canada remains “volatile and uncertain,” while it continues to climb in the U.S. amid job growth and lower gas prices, says a new report.
Canadians’ biggest concerns over the next six months are personal debt, the economy, job security and health, finds Nielsen’s global, first-quarter consumer confidence survey.
It notes that a downbeat economic outlook across the country led to a 10-percentage-point decline in sentiment about job prospects, to 44 per cent, the lowest level since 2009, and a six-percentage-point decline for immediate spending intentions, to 37 per cent, the lowest level since 2012.
“In Canada, consumer confidence still remains volatile and uncertain, even though the recession is well behind us,” said Carman Allison, vice-president of consumer insights for Nielsen Canada.
“A drop in confidence is normal following the holiday spending season when the bills start rolling in, but this year, consumers were also reeling from the effects of the coldest winter in 25 years, which led many to spend more time indoors,” she said.
The situation was exacerbated by the drop in oil prices, which led to significant job losses across Canada, she said.
“While consumers may be saving at the pump, the cost of most other essentials is on the rise, and inflationary pressures still plague wallets.”
U.S. consumer confidence increased one point on Nielsen’s first-quarter confidence index, to a score of107, maintaining an above-the-baseline optimism level (the global average is 97 points this quarter) for a year now.
Conversely, the study says confidence declined in Canada by six points to 96 compared to the fourth quarter of 2014, which is the country’s lowest score since 2012.
Meanwhile India scored highest overall on Nielsen’s first-quarter consumer confidence index, published on Tuesday, rising one point, to 130, from the fourth quarter of 2014 to levels not seen since 2011.
The report found optimism is also rising in major advanced economies such as Japan and Europe, but consumers in large emerging markets such as Brazil, Russia and China are turning more pessimistic about their prospects.
“In the U.S., optimism continued to move forward in the first quarter, likely influenced by the addition of nearly 600,000 new jobs and low gasoline prices, which put more money in consumers’ wallets,” said James Russo, senior vicepresident of Nielsen Global Consumer Insights.
And U.S. consumer spending picked up in the first quarter, with fast-moving consumer goods sales rising 2.5 per cent, compared to an annual increase of only 1.4 per cent during 2014, he said in the report.
“While 2015 is off to a good start, half of Americans are still in a recessionary mindset. As this undercurrent of uncertainty still permeates, consumers continue to think carefully about how and where they spend their money,” Russo added.
The report found 24 per cent of Canadians have no spare cash after essential expenses, up from 18 per cent a year ago.
And only 38 per cent of Canadians feel good about local job prospects compared to 45 per cent of Americans.
The second quarter of 2015 will be key to determining if the shift in mindset is temporary or will define another challenging year ahead, said Allison.
The Nielsen Global Survey of Consumer Confidence and Spending Intentions was conducted Feb. 23 to March 13 and polled more than 30,000 online consumers in 60 countries. It has a margin of error of within 0.6 percentage points.