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Canada Consumer Sentiment Falls to Lowest in Seven Weeks

Canadian consumer sentiment fell to a seven-week low as households pared expectations for growth and real estate prices.

The Bloomberg Nanos Canadian Confidence Index ended last week at 58.6, down from 58.9 the previous week and a four-year high of 60.6 last month. The index dropped below its 12-month average.

Results from polling suggest Canadians are becoming less bullish on the economy as global policy makers cut projections for growth. The outlook for real estate also has dimmed after reaching the highest in more than six years in July.

The Canada confidence index decline this week was “largely driven by a slide in sentiment related to the value of real estate,” said Nik Nanos, chairman of Nanos Research Group.

The share of Canadians who predict prices will appreciate in their neighborhood over the next six months fell to 41.4 percent last week, from 43.9 percent. The figure was 47 percent in the week ended July 11, the highest level since the survey began in 2008.

Data has shown a mixed picture for housing. Realtors in Canada’s largest cities recorded their slowest year-over-year gains in 13 months in July, according to local real estate boards, a sign the market may be cooling after a recent surge. At the same time, builders began work on 200,098 homes at a seasonally adjusted annual pace the same month, exceeding economist forecasts, Canada Mortgage & Housing Corp. said today.

Economic Outlook

The share of Canadians who think the economy will improve over the next six months declined to 17.7 percent, from 17.8 percent the previous week, and is down from 23.7 percent a month ago. Those predicting a weaker economy increased to 17.6 percent, from 16.4 percent. The gap between optimists and pessimists is the narrowest since March.

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” with 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.

Gauges of Canadian job security are also falling amid a weakening outlook for employment. Those who say their job is secure or somewhat secure fell to 65.8 percent last week, down from 70 percent in June.

After Canada’s economy created more than 800,000 jobs in the three years through 2012, gains have stalled. Year-over-year employment growth has averaged about 0.5 percent over the past three months, the slowest pace since the start of 2010. Statistics Canada reported last week the economy added 200 new jobs in July, compared with the 20,000 median forecast in a Bloomberg survey of economists.

Personal Finances

The Bloomberg Nanos index has two sub-indexes. The Expectations Index, based on responses about the national economy and real estate, slipped to 57.2 from 58.1.

The Pocketbook Index, based on responses about job security as well as personal finances, rose to 59.9 from 59.8 the previous week, buoyed by improving sentiment on personal finances.

The Bloomberg Nanos gauge is derived from polling that uses a four-week rolling average of 250 respondents. The results are accurate to withing 3.1 percentage points, 19 times out of 20.

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