- Confidence in manufacturing heartland hits lowest since 2013
- Rich and middle-aged Canadians are also more pessimistic
Pessimism bubbling around Alberta’s oil patch is being shared by the industrial heartland of Ontario, lowering Canadian household confidence for the eighth time in nine weeks.
The Bloomberg Nanos Consumer Confidence Index fell to 53 from 53.8 in the week ending Jan. 15, down from a peak of 58.6 set in mid-November. Ontario’s index fell to the lowest since May 2013 at 53.6, approaching the Prairie region’s mark of 45.1.
Signs of nationwide damage from Alberta’s heavy crude sliding toward $15 a barrel abounded last week. Canada’s dollar fell below 70 U.S. cents for the first time since 2003, government bond yields fell to record lows and stocks in Toronto languished in bear territory. Prime Minister Justin Trudeau shifted his message to a debut budget that he hopes will jump-start a stalled economy from optimism growth could be led by Ontario factories sending goods to the U.S.
“A slide in consumer confidence in Ontario, coupled with the erosion of confidence in the energy rich Prairie provinces, represents a one-two punch on consumer confidence in Canada,” said Nanos Research Group Chairman Nik Nanos.
Views on everything from personal finances to housing markets and the economy’s future diminished in the latest Nanos polling. The 21 percent of respondents who said home prices in their neighborhoods will fall in the next six months was the highest since February.
Opinions on the economy over the next six months were the most pessimistic since September, with 38.2 percent of people saying it will worsen more than double the 17.6 percent saying it will strengthen.
Consumers aren’t alone in their views. Business executives in a Bank of Canada survey published last week showed the lowest opinions on hiring, investment and inflation since the last recession in 2009.
The slide in the dollar last week had Trudeau and his Finance Minister Bill Morneau pointing to longer-term strengths that will help overcome the current bout of oil weakness. “Outside investors should be confident about Canada,” Morneau said Thursday when asked if the weaker dollar reflected doubts about the economy’s strength. He also said he is paying “close attention” to the falls in oil and the currency.
This week may bring another tough message from a policy maker, as swaps traders expect Bank of Canada Governor Stephen Poloz to cut his overnight interest rate to a record low 0.25 percent on Wednesday. Three of Canada’s five biggest banks switched their calls to predict a cut last week, citing lower oil prices and evidence it’s leading to a broader malaise.
The latest Nanos survey showed the most pessimistic people middle-aged Canadians and those with higher incomes. The Mood index for those aged 40 to 49 was the lowest since July 2012 with a reading of 50. The confidence index for people making C$75,000 ($51,600) or more fell to 53.9 from 55.4, which is the lowest since April 2013.
Nanos Research produces the weekly confidence index from questions on personal finances, job security, the outlook for the economy and real estate prices. The survey is based on phone interviews with 1,000 people and uses a four-week rolling average of 250 respondents. The national results are considered accurate to within 3.1 percentage points, 19 times out of 20.