- National sentiment dips as central bank awaits Trudeau budget
- Sparsely populated region leads for first time in five years
Canada has a new leader in consumer confidence: the four Atlantic provinces, underscoring the impact of the oil-price shock and sluggish economic growth.
Optimism in Atlantic Canada rose to a score of 58.5 from 55.5 a week earlier, surpassing British Columbia, where consumer optimism had led the nation since October, polling for the Bloomberg Nanos Canadian Confidence Index shows. It’s the first time since December 2010 that the region -- with just 6.6 percent of the population -- has led the country in economic optimism over other regions typically seen as Canada’s economic engines.
The national index, however, fell to 52.1 from 52.2 a week earlier and remains below the 12-month average of 55.1.
The results come as Canada copes with the impact of low crude prices and sluggish growth elsewhere in the economy, and as the Bank of Canada awaits Prime Minister Justin Trudeau’s first budget before deciding whether another change to the key lending rate is required. Consumers, meanwhile, are feeling the pain. The pocketbook sub-index -- measuring personal finance and job security -- fell to 57.5, its lowest level since June of 2013.
“This drop needs to be monitored to see if a negative cascading effect is emerging where negative sentiment on the future is transitioning to negative sentiment personally,” Nanos Research Group Chairman Nik Nanos said.
The worst outlook continues to be in the prairie provinces of Alberta, Saskatchewan and Manitoba, a key energy-producing region, where economic optimism fell to 41.4, a record low since the index began in 2008.
The percentage of national respondents saying they’re financially better off than a year ago fell to 12.8, a record low and down from 13.5 a week earlier. The share of those saying they are worse off rose to 31.7, up from 31 a week earlier and the highest level since May 2013.
Canadians have carried record debt loads in recent years amid low interest rates and sluggish growth. A further rate cut by the Bank of Canada is already priced in by the markets, said Robert Lawrie of Bloomberg Economics.
“While such action could help support the Canadian economy as it rebalances, it could also increase the economy’s fragility by enabling households to expand their debt burdens relative to their incomes even further,” he said.
Despite the slumping fortunes, sentiment on job security rose with 52.1 percent of respondents saying their job is safe, up from 50.4 a week earlier and the highest level in three months.
The outlook for the Canadian economy overall improved slightly. The share of those expecting the economy to pick up steam rose to 19.9 from 19.4 a week earlier, while the share of those expecting the economy to worsen fell to 42.7 from 43.
The Bloomberg Nanos Canadian Confidence Index is based on a four-week rolling average of 1,000 respondents polled by telephone. It’s considered accurate within 3.1 percentage points, 19 times out of 20.