Confidence ticked higher last month, but the recovery isn’t over
OTTAWA – The Index of Consumer Confidence ticked upwards in September as Canadians reported greater optimism on all four survey questions, but is still far below its pre-pandemic peak, the Conference Board of Canada reported recently.
The private think tank, which produces the study, said last month’s index gained 5.2 points in September to 83.6 (it was set to 100 in 2014).
“Despite this month’s uptick, the pace of the recovery of consumer confidence has stalled,” board economist Anna Feng said in her commentary, noting the index has been fluctuating around the 80 mark for four consecutive months. Compared with its peak – 120.6 in February 2020 – it remains 37 points below its pre-pandemic level.
While consumers pessimism over current finances and future job prospects declined in September, both are still well above their February levels as the share of positive responses to those questions were essentially unchanged.
However, in what can be taken as good news for this country’s big-ticket home goods retailers, positive sentiments about major purchases rose slightly. “Roughly 23% of survey respondents believe that now is a good time to make a major purchase, up 2.4 percentage points from last month,” Feng reported. “Nevertheless, the share of negative views on the question still remained high at 50.7%, matching the peak level observed during the 2008–09 financial crisis.”
Regional differences continued to be significant.
Quebec and Alberta were the only provinces posting gains in consumer confidence, as the headline index saw double-digit growth in these two regions over September. Conversely, the Index of Consumer Confidence in the Atlantic region, British Columbia, and the Manitoba-Saskatchewan region fell for the second consecutive month.
Meanwhile, Ontario’s index fell 2.4 points this month, its first decline since May. Feng noted Ontarians were most worried about their future financial situation with the share of positive views on the question contracting by 2.5 percentage points, the largest drop among the provinces. “As a result, the majority of Ontarians (54%) believe that now is a bad time for a major purchase,” she said. “This is about 20 percentage points higher than February’s pessimistic level.”
Quebec’s index jumped 20.2 points in September, giving it highest confidence index. Positive sentiments about finances and employment conditions improved significantly. “Quebec had the highest increase in optimism about future employment (up 5.5 percentage points) among provinces, resulting in the strongest sentiment about making a major purchase at this time (33.1%),” Feng said.
Alberta’s index showed the fastest recovery, increasing 15.0 points in September. Its index is now only 2.9 points below its February level. Respondents expressed a significant increase in optimism about finances, future employment and had the highest share of positive views on future finances (20.5%). “Albertans’ views on making major purchases during the month have recovered to their pre-pandemic levels,” Feng said.
British Columbia’s consumer confidence index lost 1.8 points in September, building on the 10.8-point drop in August. Only Atlantic Canada has seen a steeper decline in its index since February. The board said British Columbians worried a lot about their current finances and future employment, as both questions recorded the largest decline in positive views among provinces. “As such, only 17% of survey respondents believe that now is a good time to purchase large-ticket items, the lowest share in Canada,” Feng said.
The index for Saskatchewan–Manitoba dropped by 1.5 points this month. Residents in the region were more worried about their financial situation, both current and future. “As a result, consumer confidence about major purchases eroded significantly,” she said. “Roughly 57% cent of survey respondents believe that now is a bad time for a major purchase, the highest share of pessimistic sentiments across the country.”
The Atlantic region’s index declined by 3.4 points, leading to the country’s largest gap between its September index and its pre-pandemic level. Residents are concerned most about their future financial situation, as the share of pessimistic views on the question rose by 9.0 percentage points. “Only 9.5% of survey respondents in the region believe there will be more jobs in the future, the lowest optimism on the question across regions,” Feng said.