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Canada Counts
A survey of Canadian buying intentions.
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Consumer confidence sinks in July PDF Print E-mail
Written by HGO Staff   

OTTAWA (26 July 2012) - Canadian consumer confidence has sunk to its lowest point in two years, according to the latest survey conducted by TNS. Its Canadian Consumer Confidence Index fell 1.8 points in July, from 96.5 to 94.6; its lowest point since July 2010.

"Canadians seem to have gotten themselves into a summer funk over the economy," TNS vice president Norman Baillie-David said in a statement. "Canadians are hoping for something positive to emerge eventually, but it's just doesn't seem to be coming. So we're starting to see the glass as half empty."

Baillie-David, who is also director of the social research firm's monthly tracking study, pointed out its Present Situation Index - measuring how people feel about the economy right now - also fell by 1.4 points in July to 94.7.

Meanwhile, the Expectations Index - which measures their outlook for the economy six months from now - fell by a further two points, over and above the 3.5 it had lost during the month of June, dropping to 97.3 in July.

Joining in was the Buy Index, which also fell two points from 93.8 to 91.8 month-over-month.

"Of the three sub-indices, this drop is the one that causes most concern," Baillie-David said. "People's feelings about the economy tend to go up and down based on the previous days' headlines, but when they decide not to make major purchases as a result; this is bad news for the economy if they follow through."

The Buy Index measures the extent to which Canadians' feel that now is a good time to purchase a "big ticket item" - such as a car or a major household appliance. TNS believes it's the most important of the sub-indices, because if people feel now is a good time to buy, they may act on it, which will provide real economic stimulus.

The July survey inducted 1,015 nationally representative Canadian adults and was conducted by telephone between July 9 and 12. For a survey sample of this size, the margin of sampling error is plus or minus 3.1%, 19 times out of 20.

However, it should be pointed out that the Index of Consumer Confidence published by the Conference Board of Canada, inched up 2.9 points this month to 76.9 (the index was set to 100 in 2002). The board noted the index "remains at a relatively low level, reflecting the global economic uncertainty stemming from the European sovereign debt crisis."

However, like TNS, the board sees continued consumer reluctance on the major purchases question.

"Consumers were feeling more optimistic about future income and job prospects, but this was tempered somewhat by increased hesitancy toward making major purchases," the board said in a statement.

Regionally, the largest increase in consumer confidence was in Atlantic Canada where the index almost completely reversed last month's decline. Above-average gains were also observed in Quebec and Ontario. Confidence was little changed in the Prairies with the index there falling an insignificant 0.7 points to 103.6.

While the index for the Prairies is little changed since the beginning of the year, it remains well above that for the other regions and is the only one above 100. The largest decline in confidence occurred in British Columbia where the index fell 9.2 points to 77.9 due to a significant deterioration in the balance of opinion on the future income question, as well as to declines in the balance of opinion on the future jobs and major purchase questions.

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