Canadians aren’t taking much comfort from the Bank of Canada’s efforts to stimulate the economy.
Consumer confidence fell to its lowest in more than two years as the economy struggles with a downturn that prompted Governor Stephen Poloz to lower interest rates this month. The Bloomberg Nanos Canadian Confidence Index fell to 53.4 in the week ended July 24, the lowest since May 2013.
Heightened levels of anxiety are one of the unintended consequences from policy action to spur the economy. Both of Poloz’s rate cuts this year were followed by sharp reductions in sentiment, the data show.
The index plunged almost 3 points after Poloz cut the central bank’s key interest rate to 0.5 percent on July 15, the second downward move this year, and reduced 2015 GDP forecasts by almost half, blaming the weakness on damage from an oil-price shock and the “puzzling” lack of a rebound in non-energy exports.
The index, a composite measure based on a survey questions taken by Nanos Research Group for Bloomberg News, had been hovering above 2015 average levels before the cut.
Every week, Nanos Research asks Canadians for their views on personal finances, job security, the outlook for the economy and where real estate prices are headed.
The survey, based on phone interviews with 1,000 people, uses a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points, 19 times out of 20.
The share of those who see the economy strengthening over the next half year fell to 12.1 percent, the lowest on record dating back to 2008, the weekly survey found. The share of economic pessimists, at 37.9 percent, was the highest since March.
The data also suggest Canadians are lowering their expectations for a housing market that has been among the few recent bright spots in the world’s 11th largest economy. The percentage of respondents predicting real estate prices will fall over the next six months rose to 16.6 percent, the highest level since March. The share predicting higher prices dropped to 33.8 percent.