Canada Consumer Confidence Declines on Prairie Pessimism
Canadian consumer confidence declined for the first time in a month last week as sentiment deteriorated in the western provinces, where much of the country’s natural resource wealth is concentrated.
The Bloomberg Nanos Confidence Index measured 59.5 for the week ended June 6, down from a prior reading of 60. Confidence on the Prairies, the region comprising Manitoba, Saskatchewan and Alberta fell to 63.9 from 66.8, the steepest drop in more than two years, according to data from the survey-based index. Confidence also fell in British Columbia, Canada’s westernmost province.
“Roll up Obama’s recent announcement about a lower carbon economy in the U.S., the Russians and Chinese landing a new energy partnership and uncertainty with pipeline approvals, and together they could be resulting in a dampening effect on consumer confidence in the energy-rich provinces,” said Nik Nanos, chairman of Nanos Research Group.
Canadian crude producers say a shortage of pipeline capacity is depressing the price of the nation’s heavy crude. The price differential between Western Canada Select crude and the U.S. benchmark West Texas Intermediate widened to $19.15 at the end of last week, from $16.90 at the beginning of May.
Prime Minister Stephen Harper’s government must decide by June 17 whether to approve Enbridge Inc. (ENB)’s Northern Gateway pipeline, which would transport Alberta oil through British Columbia to the Pacific Coast where it could be shipped to Asia. A majority of British Columbians want Harper to reject or delay the project amid concern it could lead to spills, a separate Bloomberg-Nanos poll published last week showed.
President Barack Obama’s administration proposed a new Environmental Protection Agency rule on June 2 that would require power plants to cut greenhouse-gas emissions by an average of 30 percent from 2005 levels. Russia’s state-run energy exporter OAO Gazprom signed a $400 billion deal on May 21 to supply natural gas to China for 30 years.
Bloomberg Nanos’s confidence index has two sub-indexes: the Expectations Index, based on respondents’ outlook for the economy and real-estate prices, and the Pocketbook Index, based on survey responses to questions about personal finances and job security. The Expectations Index fell to 58.7 from 59.7, while the Pocketbook Index was little changed at 60.4.
The percentage of respondents who say they’ve become better off financially over the past year declined to 20.9 percent from 21.3 percent the week before.
Respondents who said the economy will improve in the next six months accounted for a 21.2 percent share, down from 22.1 percent the previous week.
Slack has built up in the world’s 11th largest economy this year as a harsh winter slowed production in the first quarter, which grew at an unexpectedly slow annual pace of 1.2 percent, Statistics Canada reported May 30. While the Bank of Canada cited the slow growth in keeping its main interest rate unchanged last week, it said the ingredients for a recovery are in place.
“Canadian consumer sentiment has remained essentially unchanged over the past two months, reflecting dynamics that point towards continued slow growth,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
The proportion of those saying their jobs are secure or somewhat secure climbed to 69.8 percent last week, the highest since March, from 67.8 percent.
Statistics Canada reported last week that 25,800 jobs were created in May. Canada’s unemployment rate nonetheless rose unexpectedly to 7.0 percent, the first increase this year, as full-time employment declined for the second month in a row.
The share of survey respondents who believe home values in their neighborhood will rise over the next six months was little changed at 41.8 percent last week.
The pace of housing construction exceeded expectations last month, the government-owned housing agency said today. Builders started 198,324 units in May, Canada Mortgage & Housing Corp. said on its website. Economists forecast 185,000 units, according to the median of a Bloomberg survey with 17 responses.
The Nanos data are based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points.
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