Confidence up in August
OTTAWA – Canadians are more inclined to make a major purchase today than at any time in the past few years, the latest Index of Consumer Confidence suggests. Indeed, the Conference Board of Canada reported the index climbed 8.1 points to 121.7 in August – the highest level since November 2007 as survey respondents also showed improved optimism about their future finances and job prospects.
However, feelings about current finances have deteriorated in recent months.
The online survey of some 3,000 Canadians took place between July 31 and August 10.
“Canadians’ feelings about their current finances deteriorated this month, likely the result of increased interest charges on variable debt following the Bank of Canada’s interest rate hike in July,” board economist Cory Renner wrote in his report. “Just 17.5% of respondents believe their financial situation has improved in the last six months, compared with almost 20% who believe theirs has worsened.”
Confidence among consumers in Ontario also rose in August – reaching its highest level since November 2007. “Ontarians are more confident about making major purchases, a topic people in the province have been shy about in the last few years,” Renner said, adding, “In August, 32.9% of Ontarians surveyed viewed now to be a good time to make a major purchase, 4.7 percentage points higher than July and the highest level since May of 2015.”
Major purchases include homes, cars and other big ticket items such as furniture and major appliances.
He attributed much of this optimism to increases in housing affordability, particularly in the Greater Toronto Area.
The index in Quebec rose for a third straight month to reach their highest level since April 2003. “Quebecers continue to be optimistic about major purchases, with 40.7% of those surveyed indicating that now is a good time to make such purchases, significantly higher than any other province,” Renner said, adding the rise was driven by future expectations as respondents believe both future finances and future employment will improve.
The Alberta index recovered somewhat in August despite taking a major step back in July. However, it remains well below levels seen during the period of peak oil prices, though confidence has been trending upward over the last year as Albertans cope with a new reality.
As news stories about British Columbia’s wildfires dissipated in August, the province’s citizens were more positive. After declining 13 points in July, British Columbia’s index rose 18 points in August. The Bank of Canada’s rate rise and overall high home prices continue to keep British Columbians pessimistic about making major purchases. People in Vancouver are especially pessimistic about making major purchases. “However, while British Columbians have less favourable views about making major purchases than Canadians as a whole, there has been optimism of late, with August’s 27.4% positive response rate being among the highest in the province for the last two years,” Renner wrote.
The Saskatchewan–Manitoba index was the only one to decline in August, dropping by one point after gaining 12.7 points in July. The biggest concern for citizens in Saskatchewan and Manitoba is future finances, with only 16.8% of respondents expecting their finances to improve, the lowest since January 2016 and lower than all other provinces.
The Atlantic index bounced back in August after a large decline in July. Renner noted the Atlantic Provinces are the most positive about their current finances (compared with all other provinces) but remain among the least optimistic about future finances. The optimism about current finances is no surprise as the Conference Board forecasts all four provinces will see wage growth above the national average in 2017. However, much of this wage growth occurred in the first half of the year meaning weaker growth in the second half, thus, more pessimism about future finances.