Confidence up in November
OTTAWA – Pushed by strong labour market growth, the Conference Board of Canada saw its Index of Consumer Confidence reach the second highest level since 2007 last month and is an average of 17% in 2017 over 2016, one of the highest yearly improvements since it was started.
The board pegged November’s index at 121.1 (it was set at 100 in 2014).
“However, there is some cause to believe optimism will weaken as Canadians continue to grapple with rising debt loads and their ability to fund major purchases,” board economist Cory Renner said in his report. “After soaring through the first half of the year, durable good purchases are likely to slow; optimism about future purchases is therefore a key indicator to track.”
He noted there are two factors that could affect spending over the coming year: interest rate hikes and a slowdown in employment gains. “The Bank of Canada rose rates twice this past summer and the Conference Board expects three more rate rises by the end of next year,” Renner said. “Yet so far, this has not affected consumers’ willingness to purchase major items, with 33.5% of respondents answering favourably in November to questions about making major purchases, up 4.5 percentage points from the same period last year.
“Households also remain positive about their job prospects,” he continued, adding, “Nationally, 71.6% of respondents said their job prospects would improve or stay the same over the next six months. This is up from 62.8 per cent the same time last year.”
Despite the optimism about job prospects and a pick-up in wage growth (wages grew by an annualised 3% in October), the report said households were less optimistic about their future finances: 22.6% of households believe their finances will improve over the next six months, down from 24% last month.
The most interesting news coming from Ontario is the impending minimum wage hike and its effect on overall confidence in the country. “Ontarians’ consumer confidence declined by 1.7 points in the most recent survey, continuing a downward trend seen over the last four months,” Renner said, adding, “Ontarians had a more positive outlook for future employment, with 13.6% of respondents believing their employment prospects will improve over the next six months, up from 12.0% in October.
“But although Ontarians were optimistic about employment, their views about current and future finances fell,” he continued. “In Ontario, 21.4% of respondents believe their future finances will improve over the next six months, down from 23.9% in October.”
Meanwhile, the index in Quebec rose 14.1 points in November, reaching its highest level in well over a decade. People in Quebec continue to be especially optimistic about major purchases (the highest positive response rate in Canada), and views about future employment and finances are above the national average.
Albertan’s confidence surged by 8.4 points in November, Renner said, pointing out the province’s index is now at its highest level since the end of 2014. “Albertans are especially more optimistic about the future, with positive response rates to expectations about future job prospects and future finances surging,” he remarked.
The index for British Columbia rose 10 points in November, the second consecutive double-digit increase. British Columbians are expecting employment to rise, as 15.9% of respondents believe their job prospects will improve in the next six months, up from 12.6% last in October. “Views about making major purchases have also improved, reaching their most optimistic level since 2007, despite concerns about housing affordability in the province,” Renner reported.
The Saskatchewan–Manitoba index was one of three to decline in October, though it remains elevated compared with the last 16 months. People in the region continue to have below or significantly below average response rates for all four questions (about current finances, future finances, job prospects, and major purchases).
Volatility remains in the Atlantic Canada index, which declined by almost 10 points in November for the fourth time this year. “The Atlantic provinces continue to struggle, with economic growth well below the national average,” Renner pointed out.
The Conference Board conducted its online survey of some 3,000 Canadian adults between November 6 and 16, 2017.