- Oil production restarting after disruptions from wildfires
- Nationwide, consumer confidence holds near year-to-date high
Confidence in Canada’s oil heartland climbed to the highest since November last week, as crude prices reached $50 a barrel and companies restarted production following wildfires in Alberta, telephone polling shows.
The Bloomberg Nanos Canadian Consumer Confidence Index for the Prairies region including Alberta and Saskatchewan increased to 49.2 in the week ended May 27, from 48.2 in the prior period. The region’s gain helped keep the national sentiment index at 57.5, close to the 2016 high of 57.7 in the previous report.
Companies including Suncor Energy Inc. are resuming operations after Alberta wildfires forced the evacuation of more than 80,000 people from Fort McMurray and knocked more than 1 million barrels of production a day offline this month. The increase of consumer confidence in the region is in line with the central bank’s view in last week’s interest-rate decision that Canada’s economy will rebound in the third quarter.
Even with the setback from the fires, the Prairie region’s confidence has remained well above the all-time low of 41.4 in February, when oil prices fell to about $26 a barrel.
Crude climbed about 7 percent this month in New York amid lower U.S. production and the unplanned disruptions in Canada and Nigeria. West Texas Intermediate fell 32 cents to $49.24 a barrel Monday.
Sentiment was also buoyed by expectations for real estate values. The share of respondents in the Nanos survey who expect home prices to rise in the next six months was 44.2, compared with a 12-month average of 35.2 percent.
“Rising asset prices are giving households reason for optimism; both the stock market and Canadian dollar are up nearly 17 percent since their January lows, and the rising trend in real house prices remains intact,” said Robert Lawrie, an economist at Bloomberg in New York. “But a further strengthening of the dollar and further inflation of the housing bubble would pose risks to the fragile Canadian economy.”
The Nanos data is based on a rolling four-week average of telephone polling totaling 1,000 respondents. The results are accurate within 3.1 percentage points, 19 times out of 20, with larger margins of error in regional data.