Consumer confidence in Ontario is slumping as voters face an election that has focused on the finances of Canada’s biggest province.
The Bloomberg Nanos Confidence Index measured 58.8 in Ontario in the week ended May 23, down from 59.5 the week before. Nationally, confidence was little changed at 59.6 last week, with sentiment improving in every region except Ontario.
Consumer sentiment in Ontario has dropped from 60.4 on May 2, the day Premier Kathleen Wynne said the province would hold June 12 elections, according to the survey-based index. Over the same period, national confidence hasn’t changed.
The drop in Ontario may be related to the announcement by Progressive Conservative Leader Tim Hudak that he’d cut 100,000 public-service jobs, said Nik Nanos, chairman of Nanos Research Group. Hudak has said the province must move faster to eliminate its C$12.5 billion ($11.5 billion) deficit while cutting corporate taxes.
“The fact that the election is competitive and one of the major parties is proposing significant cuts could be creating a ‘chill-effect’ on consumer confidence,” Nanos said.
The Ontario election is shaping up as a choice between austerity and economic growth, Wynne said in a May 13 interview at the Bloomberg Canada Economic Summit. Wynne’s Liberals are betting an agenda of spending increases and tax hikes on high-income earners will convince voters to extend the party’s 11-year run in power, even as the province struggles with sluggish economic growth and a jobless rate that exceeds the national average.
The party that wins the election will face the largest deficit of the nation’s 13 provinces and territories relative to the size of their economies. The province’s manufacturing sector, once one of Canada’s economic engines, was hit hard by the global recession. Since September 2008, Ontario manufacturers have eliminated 123,500 jobs, more than half the 234,000 factory jobs lost nationally, according to Bloomberg calculations using Statistics Canada data.
Ontario’s unemployment rate of 7.4 percent compares with a national average of 6.9 percent. The government projects the province’s economy will grow 2.1 percent this year, compared with the 2.3 percent median estimate for the Canadian economy in a Bloomberg survey of economists.
The Canadian economy has been showing mixed signals. Retail sales unexpectedly fell 0.1 percent in March on lower automobile and clothing receipts, Statistics Canada reported May 22. And the inflation rate quickened in April to reach the central bank’s target for the first time in two years, the agency said May 23.
“Canadian consumer confidence, like the economy, appears to be modestly slowing,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Bloomberg Nanos’s confidence index has two sub-indexes: the Expectations Index, based on responses on the outlook for the economy and real-estate prices, and the Pocketbook Index, based on survey responses to questions about personal finances and job security. The Expectations Index rose to 59.2 from 59.0, while the Pocketbook Index dropped to 60.0 from 60.2.
The percentage of respondents who say they’ve become better off financially over the past year fell to 20.7 from 20.8, while the share of survey respondents who say the economy will improve in the next six months was little changed at 22.0.
The share of those saying their jobs are secure or somewhat secure climbed to 67.3 percent from 66.8 percent, while those who felt somewhat not secure or not at all secure rose to 10.8 percent share, from 10 percent.
The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months rose to 41.3 percent last week from 40.7 percent the week before.
The Nanos data are based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points.
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