Consumer confidence falls as pandemic’s third wave strikes
OTTAWA – The Index of Consumer Confidence (ICC) fell 6.8 points in April to 98.4, marking the first decline in the past six months, the Conference Board of Canada said, noting that pessimism intensified on all four survey questions.
In making her report, board economist Anna Feng pointed out that as COVID-19 cases have soared over the past several weeks, several regions across Canada implement another round of strict lockdown measures. This prompted the industry to drop in April everywhere except for Atlantic Canada.
“In particular, consumer confidence about the future significantly declined,” she said. “The share of negative views on future employment rose for the first time since October 2020 – when the second wave of COVID-19 began.”
However, because of government income transfer programs, sentiments on questions related to finances remained relatively stable although optimism about future finances remained below the level seen before the pandemic.
“Rising concerns about the future, as well as tightening restrictions, eroded Canadians’ confidence about making major purchases,” Feng said. “In April, more than 54% of survey respondents said that now is a bad time to purchase a large-ticket item, which is still above the peak seen during the 2008 financial crisis. The anxiety will likely weigh on household spending on discretionary items in the near term.”
After the implementation of new stay-at-home orders on April 8, Ontario’s index retreated 5.6 points in April. Ontarians became particularly pessimistic about their future job prospects, as the province logged the highest share of negative views (36.2%) on the question. “This translates into consumers’ anxiety about discretionary spending,” Feng said, adding, “More than 55% of survey respondents believe that now is a bad time to make a major purchase, the second-highest share of pessimistic views among regions.”
The Quebec index fell 2.5 points in April, after gaining ground in each of the past three months and now ranks are the bottom of the recovery chart compared with other regions, sitting at only 75% of its pre-pandemic level.
The extension of lockdown measures weighed on Quebecers’ confidence about the future. Only 16.1% of survey respondents held optimistic views about their future finances, well below the 30.3% recorded before the pandemic. “Concerns about the future also cooled off Quebecers’ passion for major purchases. Close to 60% of survey respondents in the region said that now is a bad time to make a major purchase,” Feng said.
Alberta’s index declined by 7.4 points in April, the second-largest drop among regions. As COVID-19 cases rise in the province, Alberta implemented tighter restrictions on dine-in services and group gatherings. Increasingly, Albertans see their future job prospects and finances as gloomy. The share of pessimism on the question of future finances increased to a six-month high, 24.4% as Albertans remain cautious on major spending this month.
The index in British Columbia plunged 18.1 points in April, falling from 98% of its pre-pandemic level last month to only 85%. British Columbians are increasingly concerned about their future job prospects, as the province logged one of the largest step-back in positive sentiments on the question of future employment since last March.
“Consumers in British Columbia are also concerned about their current finances compared to six-months ago, as only 16.9% of survey respondents said that now is a good time to make a major purchase, the lowest share of optimistic views across Canada,” Feng said.
The index in the Saskatchewan-Manitoba region dropped by 5.3 points in April, falling to 79% of its pre-pandemic level. Feng noted the weakness stemmed mainly from concerns over future finances as consumers in the region are less confident on the major purchases question.
In contrast, the index in the Atlantic region advanced 16.9 points in April, following a 21.5-point increase in March. “People in the region are more optimistic about their future finances and job prospects, as optimism improved and pessimism retreated on both questions,” Feng said. “However, concerns over consumers’ current finances, as well as the delay in the re-opening of the Atlantic Canada bubble this month, kept consumer confidence in major purchases subdued.”