Canadian consumer confidence remains at almost the highest in four years amid a buoyant equity market and signs of a strengthening economy.
The Bloomberg Nanos Confidence Index measured 59.6 in the week ended May 2, little changed from the previous reading of 60.2 that was the highest since 2010. The index is averaging 58.4 this year versus 57.3 last year.
Canada’s primary stock gauge, the Standard & Poor’s/TSX Composite Index, capped a 10th straight month of gains in April and rose last week to levels not seen since June 2008, led higher by miners and energy companies.
Stock markets in Canada and the U.S. reaching near-record levels recently have “clearly given a boost to consumer expectations in both countries during the month of April,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
Canada’s economy is shaking off the impact of a severe winter that damped production at the end of last year, with recent data showing gains in output and employment and commodity prices on the rise. Consumers are also the most optimistic about housing in five years, as the real estate market shows little signs of correction.
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 remained at 60.0 last week while Pocketbook Index fell to 59.3 from 60.2.
Perceptions about the economy’s strength remain elevated, according to the survey. The share of respondents who say the economy will improve in the next six months was unchanged at 24.7 percent, compared with an average 21.3 percent this year. The share of those who anticipate a weakening, at 16.3 percent, is also well below the 2014 average of 20.9 percent.
Statistics Canada reported April 30 gross domestic product rose for a second month in February, supporting the Bank of Canada’s estimate of first-quarter economic growth at a 1.5 percent annualized rate. That compares with a 0.1 percent rate in the U.S. for the quarter.
Earlier last month, Canada’s statistics agency reported employment rose by 42,900 in March and the jobless rate fell to 6.9 percent from 7.0 percent. The April jobs report will be released May 9, with economists surveyed by Bloomberg as of today projecting a 13,500 gain.
The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months was 42.8 percent last week, the highest since 2009.
The Canadian Real Estate Association reported last month existing home sales rose in March at the fastest pace in seven months, led by a reviving market in Alberta. Sales in Vancouver were 16.1 percent higher in April than a year ago, the Real Estate Board of Greater Vancouver said last week.
Gains in consumer confidence in recent weeks have been led by prairie provinces such as Alberta as they benefit from strengthening commodity prices. The gauge for the region, at 66.1, is up from as low as 61.7 in March. The Bank of Canada’s commodity price index is up 13.9 percent since Nov. 13.
The slide in the Pocketbook Index was led by a drop in the percentage of respondents who say they’ve become better off financially over the past year, to 18.3 percent from 19.7 percent, reaching the lowest since Feb. 14. The percentage of those saying their jobs are secure or somewhat secure slipped to 64.1 percent from 64.6 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.