Confidence index takes a plunge
OTTAWA – The Conference Board of Canada has reported its Index of Consumer Confidence suffered its largest monthly drop since April last month as Canadians expressed concerns about future job prospects although with a growing uneasiness about making a major purchase.
The private think tank said the index fell 9.5 points in October to 74.1 – well below the 121.0 recorded in February 2020, immediately prior to the declaration of the pandemic. The index was set to 100 in 2014 and was set at 112 in November 2019.
“As the second wave of COVID-19 spread across several regions, Canadians started to worry that more restrictive physical distancing measures may weigh on their future employment prospects. As a result, shares of positive responses on the question declined (down 4.6 percentage points) while pessimistic views increased (up 7.0 percentage points),” board economist Anna Feng noted in her commentary, adding consumer sentiment about future finances also dropped to its lowest point since April. “As government income support programs are expected to wind down, Canadians are anticipating that their future financial conditions will deteriorate.”
Of great concern to Canada’s furniture, mattress and major appliance sector is only 18.5% of survey respondents believe now is a good time to purchase a big-ticket item. “This is only about 60% of where February’s share stood,” Feng said.
October’s index also showed considerable differences across the country. For example, the indexes in Quebec and Alberta each declined more than 20 points in October, their largest drop since April. As restrictions tightened amid increasing COVID-19 cases, Ontario’s index dropped for the second consecutive month. Meanwhile, the indexes in both the Atlantic region and British Columbia logged double-digit growth in October.
Ontario’s index declined for the second consecutive month in October, dropping to the second-lowest level in the country. Ontarians were the least confident about big spending this month, as only 13.7% – down 5.4 percentage points from last month – of survey respondents said now is a good time to make a major purchase. While sentiments on household finances stayed relatively stable, Ontarians were particularly concerned about their future employment conditions.
Quebec’s index suffered the largest monthly drop among the regions. The province now has the largest gap (72.4 points) between its current index and its February level. Quebecers expressed concerns about both their future finances and future job prospects, as both questions logged significant declines in their share of positive views. “More than 50% of Quebecers believe now is a bad time to purchase a big-ticket item,” Feng said. “This is twice as many as in February.”
Alberta’s index showed the second-largest drop following Quebec and was the only province to record declining positive views on all four survey questions. Albertans worried particularly about their future finances and were also less confident about making major purchases as positive views declined by 3.7 percentage points.
Conversely, British Columbia’s index enjoyed the second-largest growth among the regions, following Atlantic Canada. Feng noted B.C. was the only province logging improvements on the major purchases question and had the lowest share of pessimistic views about future job prospects although it remained well above its February level.
The Saskatchewan–Manitoba’s index gained ground in October, following two consecutive months of decline. “Consumers in the region felt more optimistic about their finances, both current and future, as both questions had significant drops in the share of negative views,” Feng said, adding this was offset by a decline in positive sentiments about future employment conditions and only 17% of respondents felt confident about making a major purchase – down 3.5 percentage points from last month.
Atlantic Canada topped the chart in October, with the largest increase in the index. “This month, consumers in the region felt much more confident about their finances but also worried more about their future employment,” Feng said, adding, “The share of positive views on major purchases declined by 7.4 percentage points, suggesting that consumers remain cautious about their spending.”