Canadians have become the least optimistic since February about the outlook for the economy as global policy makers pare projections for growth.
The share of Canadians who think the economy will improve over the next six months declined to 17.8 percent in the week ended Aug. 1, from 21.2 percent the previous week and as high as 23.7 percent in early July, according to polling by Nanos Research Group for Bloomberg News. The average this year is 21.5 percent.
Bank of Canada Governor Stephen Poloz cut his forecasts for economic expansion last month, predicting the world’s 11th-largest economy will take two years to return to full output, in part due to what he called “serial disappointment” in global growth. That pessimism was reflected in a July 24 International Monetary Fund report that cut its projections amid growing concern that geopolitical risks, such as Middle East unrest, will rattle the world economy.
The Bloomberg Nanos Canadian Confidence Index fell to 58.9, from 59.8 the previous week. It was the second straight decline in the survey-based index after it reached the highest in more than four years.
Consumers have grown more bearish even amid signs last week Canada’s recovery may be shifting into higher gear. The U.S. economy, the biggest market for Canadian exports, grew at a 4 percent annualized pace in the second quarter, faster than economists forecast. Canada’s output expanded in May at the fastest pace in four months as automakers ramped up output.
Employers in the U.S. added more than 200,000 jobs for the sixth straight month in July. Statistics Canada will report employment figures for July on August 8.
The Bank of Canada last month cut its forecasts for Canada’s growth, to 2.2 percent from 2.3 percent for this year and to 2.4 percent from 2.5 percent next year. Poloz has said growth in exports and business investment needs to pick up in order to have a self-sustaining recovery.
The Nanos index is derived from weekly polling 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, 19 times out of 20.
The index has two sub-indexes. The Expectations Index, based on responses about the national economy and real estate, slipped to 58.1 from 59.3.
The percentage of those predicting higher real-estate prices over the next six months dropped to 43.9 from 44.4. The gauge has averaged 40.4 in 2014. The share of those expecting a decrease in prices rose to 13.1 percent from 12.5 percent.
The Pocketbook Index, based on responses about job security as well as personal finances, fell to 59.8 from 60.2 the previous week.
The proportion of people who describe their job as at least somewhat secure slipped to 67.5 percent from 67.9 percent. The 2014 average is 66.7 percent.
The percentage of those who think their finances were better off in the last six months fell to 18.4 from 18.6. That indicator has averaged 19.5 percent this year.
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