Canadian consumers are heading into 2014 with more confidence than a year ago, buoyed by optimism that jobs are more secure and real-estate prices will rise, according to the Bloomberg Nanos Canadian Confidence Index.
The weekly sentiment measure rose to 58.4 for the period ended Dec. 27, up from 57.8 the previous week and higher than the 57.3 average for 2013. The gauge ended 2012 at 52.9. Since then, consumers’ views on job security and real-estate prices have improved, while the proportion of people pessimistic about their personal finances and the national economy declined.
After slumping at the start of the year, Canada’s economy is showing signs of improvement, with consumers buoyed by stronger job gains, a rally in stocks, real estate that has defied predictions of a crash and a strengthening economy in the U.S., the nation’s largest trading partner.
The “end-of-year cheer” was likely aided by improving U.S. economic data, said Joseph Brusuelas, senior economist with Bloomberg LP in New York. The American economy added 203,000 positions in November, pushing the jobless rate to a five-year low of 7 percent, the Labor Department reported Dec. 6. The U.S. is Canada’s largest trading partner.
Monthly job gains in Canada have averaged 26,500 between August and November, up from 6,000 in the first seven months of the year. After posting declines this year through June, Canada’s benchmark Standard & Poor’s/TSX Composite Index recovered to post an increase of 9.2 percent through Dec. 30.
Economists surveyed by Bloomberg project Canada’s economy will expand by 2.3 percent in 2014, compared with 1.7 percent in 2013, with the unemployment rate averaging 6.8 percent next year, from 7.1 percent in 2013, according to median estimates.
Consumer confidence fell to a low for the year of 50.2 in March, when employment dropped by the most since the recession four years earlier and Statistics Canada data for the fourth quarter of 2012 showed the economy stagnating.
The provinces of Ontario and British Columbia showed the most improvement in consumer confidence in 2013, said Nik Nanos, head of Ottawa-based polling firm Nanos Research Group. Increasing confidence outside the “energy-hot” region that includes Alberta bodes well for the nation’s economic outlook, he said.
Respondents who say they’re worse off financially dropped to a 24.4 percent share last week, compared with 36.8 percent at the end of 2012. The percentage predicting a weaker Canadian economy fell to 17.9, from 23.2 in that period.
Bloomberg Nanos’s confidence index has two sub-indexes: the Pocketbook Index, based on survey responses to questions about personal finances and job security, and the Expectations Index, based on surveys about the outlook for the economy and real-estate prices.
The Pocketbook Index rose to 60.2 from 59.7 last week. The Expectations Index increased to 56.6 from 55.9, according to the Nanos report.
The share of Canadians who say they’re better off financially over the last year rose to 20.0 percent from 18.8 percent the previous week, the Nanos report last week showed.
Those who say the Canadian economy will improve in the next six months increased to 20.5 percent from 20.3 percent, while the share of respondents saying they feel secure or somewhat secure in their jobs remained at 66.4 percent.
The share of respondents who think the value of real estate in their neighborhood will increase over the next six months fell to 34.6 from 34.8.
Regionally, Quebec, Ontario and B.C. saw increases in confidence last week. Sentiment in the Prairie provinces of Alberta, Saskatchewan and Manitoba dropped for a seventh straight week, the data show.
Confidence improved in every age group except those aged 30 to 39, and increased in every income class except those earning C$15,000 ($14,030) to C$29,999 per year, and those earning C$60,000 to C$74,999.
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 within 3.1 percentage points.
An ice storm the weekend before Christmas left more than 300,000 homes without power in Toronto, curbing retail sales during the holiday shopping rush.
The Bank of Canada forecasts the economy will gain momentum next year as exports and business investment increase. The economy grew 0.3 percent in October, the fourth straight monthly gain, led by manufacturing output, Statistics Canada reported Dec. 23.
The statistics agency’s next major data release is Jan. 6 when it reports on industrial and raw-materials prices.