Consumer confidence remains low but hits pandemic high
OTTAWA – The Conference Board of Canada revealed its Index of Consumer Confidence gained 4.9 points to 90.7 in January, exceeding last March’s level for the first time since the pandemic hit. Still, the index remains 25% below its pre-pandemic level.
“Canadians are increasingly confident about their financial situation, especially their current finances,” Conference Board economist Anna Feng said in a statement. “This is likely because the economy is in better shape than it was six months ago, and income support programs have been extended.”
With the rollout of vaccines now under way, more Canadians are feeling hopeful in January. Especially on the question about major purchases, an increasing share of respondents (22.8%) believe now is a good time to make a major purchase. Improving confidence, coupled with rock-bottom interest rates and discounted consumer prices will help support near-term growth in consumer spending.
However, rising COVID-19 cases and tightening restrictions will likely hamper consumer spending. Household sentiments about future employment stalled, and there is still a significant proportion of consumers (58.7%) who expect their finances to remain the same over the coming six months.
The Index of Consumer Confidence in Ontario slipped 0.8 points in January, likely as a result of the province-wide shutdown implemented on Boxing Day. The provincial government declared a second state of emergency after this survey of consumer confidence was conducted to address spiking numbers of COVID-19 cases and is likely weighing on consumer confidence.
Ontarians are concerned about their finances, as we saw optimism fall on questions related to their current and future finances. In terms of future job prospects, the share of pessimistic views on the question rose to 44.0% this month, nearly doubling the level of pessimism observed before the pandemic hit. As such, it is not surprising Ontarians have the lowest share of positive responses on the question of major purchases. Only 19.2% of survey respondents believe now is a good time to purchase a large-ticket item.
Quebec’s index rose 9.1 points in January, the second-largest increase (after Alberta) among regions. However, Quebec still has the largest gap between its current and its pre-COVID index levels. While Quebecers’ sentiments about their finances significantly improved, an increasing share of survey respondents (46.7%) believe job market conditions will be similar six months from now, as lockdown restrictions keep tightening. This resulted in weaker confidence on major purchases. More than 52% of respondents view now as a bad time to make a major purchase, the highest level of pessimism in the country.
Alberta’s index soared 15.3 points to 64.6 in January, making it the first province to recover to its pre-pandemic level (although consumer confidence remains historically low). Rising oil prices along with COVID-19 cases falling since mid-December 2020 has helped Albertans’ confidence recover on all four survey questions this month.
While people in Alberta were optimistic about their future job prospects during the survey period, recent news that the Keystone XL pipeline expansion project again faces cancellation will likely hurt confidence moving forward. With improved optimism about the future, the positive response rate on the question of major purchases rose 9.3 percentage points to 24.8% this month, the greatest improvement across the six regions across covered in the survey.
The index in British Columbia increased by 3.1 points in January, coming on the heels of a staggering 28-point jump in December 2020. Most of the improvement in confidence stems from consumers’ rising optimism about their finances. However, British Columbians’ concerns over future job prospects intensified this month. The share of pessimistic views on future employment rose 6.8 percentage points to 34.2%, the largest increase among regions. As such, British Columbians became more cautious about making major purchases with positive views among respondents declining to 21.6%.
The index in the Saskatchewan–Manitoba region rose 8.7 points to 74.3 this month, recovering close to 80% of its pre-pandemic level. With significant improvement on sentiments about future employment, the region now has the largest share of positive views (18.9%) on job prospects six months from now. Consumers in the region also feel more confident about making a major purchase this month, as the share of positive views on the question rose to 23.7%.
The Index of Consumer Confidence in the Atlantic region dropped 2.7 points in January, the largest decline across Canada. People in the region are increasingly worried about their finances, as pessimistic views increased for questions on both current and future finances.
Concerns for future job prospects also grew this month, as only 8.3% of survey respondents believe there will be more jobs six months from now – the lowest across the country. While sentiments about major purchases ticked higher, the share of pessimism remains significant (48.4%).