Canadian consumer confidence rose last week as optimism about personal finances and the real estate market improved, survey data show.
The Bloomberg Nanos Confidence Index measured 60.0 for the week ended May 30, up from 59.6 the previous week and close to the 12-month high of 60.1 reached on April 25. Confidence about job security and the economic outlook also increased, according to the survey-based index.
“The second-quarter improvement in sentiment suggests consumer spending should rebound after weakness in the first quarter,” said Charles St-Arnaud, London-based senior economist at Nomura Securities International Inc.
“The expectations side of the report has improved a lot in recent months,” St-Arnaud said. He also cited as support “the less-gloomy picture from the Bank of Canada, expectations that the U.S. economy will improve, the feeling of job security and low interest rates, which help household finances by leaving the cost of debt-servicing low.”
Bank of Canada Governor Stephen Poloz said in April there’s evidence of a “gradual strengthening” of the economy. The central bank has said the nation’s recovery hinges on a pickup in business investment and exports.
Consumer confidence has hovered between 59.0 and 60.0 for the last eight weeks amid mixed signals about the strength of the world’s 11th largest economy.
Output grew at an unexpectedly slow pace of 1.2 percent on an annualized basis in the first quarter, as a harsh winter slowed housing construction and business spending, Statistics Canada reported May 30.
A week earlier, the agency said Canada’s inflation rate quickened in April to reach the central bank’s 2 percent target for the first time in two years. The Bank of Canada releases its latest interest-rate decision June 4.
Confidence rose in every region except the Atlantic provinces. In Ontario, where optimism had waned since Premier Kathleen Wynne called an election for later this month, sentiment rose to 59.4 from 58.8 the week before.
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 59.7 from 59.2, while the Pocketbook Index increased to 60.4 from 60.0.
Confidence is “remaining on the positive side of the consumer sentiment ledger,” said Nik Nanos, chairman of Nanos Research Group.
The percentage of respondents who say they’ve become better off financially over the past year climbed to 21.3 percent, the highest in more than two months, from 20.7 percent the week before.
Sentiment about personal finances may be supported by Canada’s stock market, which had recorded gains for 10 consecutive months before sliding 0.4 percent in May.
“The breakneck acceleration of Canada’s equity market moderated in the past month, albeit at a still extraordinary 15.4 percent year-over-year pace,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Respondents who said the economy will improve in the next six months accounted for a 22.1 percent share, up from 22.0 percent the previous week.
The proportion of those saying their jobs are secure or somewhat secure climbed to 67.8 percent, the most since March, from 67.3 percent, while those who felt somewhat not secure or not at all secure rose to 11.7 percent from 10.8 percent.
“Employment growth is sluggish, wage growth is sluggish, and though borrowing has slowed, households still borrow too much,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc. “I’m concerned about the ability of consumers to do much to support growth.”
The share of survey respondents who believe home values in their neighborhood will rise over the next six months climbed to 41.8 percent last week from 41.3 percent.
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.
To contact the reporter on this story: Andrew Mayeda in Ottawa at firstname.lastname@example.org
To contact the editors responsible for this story: Paul Badertscher at email@example.com Chris Fournier