Consumers sour on major purchases as index flattens
OTTAWA – Canadians were not feeling much enthusiasm for making major purchases as COVID-19 cases surged across the country throughout November, according to the Conference Board of Canada, but improvement in other areas resulted in its Index of Consumer Confidence remaining unchanged from October.
The board said the index stalled at 74.1 in November, well below the 112 recorded for the same month of 2019 and the 121 recorded in February 2020, just prior to the pandemic being declared. The index was set to 100 in 2014.
In her report, board economist Anna Feng noted that as the pandemic lingers, more Canadians expect their future finances and job prospects to remain the same over the next six months. “The share of respondents who expect no change to their future finances increased to a record high of 58.4% this month,” she said.
Consumers in Ontario and Quebec were more optimistic about making a major purchase – such as a house, car, furniture or appliances – than their compatriots living in every other region of the country. “The overall share of positive views on the question remains well below February’s level,” Feng said, adding, “We expect announcements of vaccines to bring more enthusiasm to consumer confidence in the near future.”
The board said the pendulum has swung for all regions in November. The Atlantic region, British Columbia, and the Saskatchewan–Manitoba region – which all had rising indexes last month – logged their largest drop since April. Meanwhile, the indexes of Quebec, Alberta, and Ontario rebounded after last month’s plunge.
Ontario’s index ticked up slightly in November, after falling in each of the two prior months, as consumers there are feeling slightly more optimistic about their future job prospects, which in turn improved their outlook on the major purchases question. “Despite the uptick, Ontarians’ positive sentiments on major spending remained well below their pre-pandemic level,” Feng said. “With only 17% of consumers in the province being optimistic about major purchases, Ontario has the largest gap between this month’s level of optimism and February’s.”
Quebec’s index made the largest monthly gain driven by increasing optimism about current finances and future job prospects although concerns over future finances remained elevated. “Consumers in the province were also more confident about major spending. Around 32% of survey respondents in the region think now is a good time for a major purchase, the highest proportion in the country,” Feng reported.
Alberta’s index also rose, thanks to improvements in consumer sentiments toward their financial situation. “Nevertheless, Albertans are concerned about their future employment,” Feng said. “With optimism on the question falling for past two months, more than 50% of survey respondents in the province now think there will be fewer jobs in six months. This was also reflected in Alberta’ declining positive sentiments on the question of major purchases.”
British Columbia’s index suffered its largest decline since April, driven by retreating optimism in all four survey questions. “As concerns over finances and employment intensify, British Columbians are feeling cautious about major spending,” she said. “This month, B.C. had highest share of pessimistic sentiments in the country making a large purchase. With a 7.0 percentage point increase in pessimistic views, close to 60% of survey respondents in the province believe now is a bad time to spend on large-ticket items.”
November’s surge in COVID-19 cases across Manitoba and Saskatchewan drove the monthly decline in the regional index since April. “Pessimism grew on all four survey questions, especially on future finances and job prospects,” Feng said, adding few people believe there will be more job six months from now. “As such, about 60% of consumers in the region consider now a bad time to make a major purchase, 22.2 percentage points higher than February’s share.”
The board noted this month’s staggering 25.8-point decline in the Atlantic region’s index gave it the largest gap between November and February values in Canada (71.7 points). “Sentiments toward major purchases deteriorated this month,” Feng said. “The share of pessimistic views on the question posted largest increase among regions. Consumers in the region are worried about their current future financial conditions, while concerns over future employment stayed relatively similar to last month.”