Canada Consumer Confidence Rises for Third Straight WeekGreg Quinn
Canadian consumer sentiment rose for a third straight week as optimism about personal finances led gains in all categories of the Bloomberg Nanos Canadian Confidence Index.
The broad measure rose to 58.6 in the week ending Feb. 28 from a prior reading of 57.6, as the share of people having a favorable view of their finances jumped to 21.4 percent from 19 percent.
Rising confidence may bolster the consumer spending that continues to underpin growth in the world’s 11th largest economy. Statistics Canada reported last week the economy expanded at a faster-than-expected 2.9 percent in the final quarter of 2013, driven by household expenditures. The agency also said last week household net worth rose 45 percent between 2005 and 2012.
“Positive movement over the past week has largely been driven by improved perceptions related to personal finances,” said Nanos Research Group Chairman Nik Nanos. “This has emerged at the same time data from Statistics Canada was released that suggests the net worth of Canadian families has increased.”
The survey also showed growing optimism about the economy’s prospects, the real estate market and job security, which reached the highest in more than two years.
Rising confidence coincides with higher equity values. The Standard & Poor’s/TSX Composite Index rose a fourth straight week to touch 14,280 on Feb. 28, the highest since April 2011.
Finance Minister Jim Flaherty issued a budget last month that shows Canada returning to surplus next year, while the statistics agency reported that the country’s inflation rate rose to 1.5 percent in January, the fastest since June 2012, and Canada’s jobless rate fell to 7 percent.
Nanos found the proportion of respondents who see their jobs as secure or somewhat secure rose to 68.2 percent from 67.5 percent last week. The 51.2 percent of people reporting secure employment was the highest since the end of 2011.
Those who expect the Canadian economy to improve in the next six months rose to 19.6 percent from 18.2 percent of respondents.
The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months rose to 37.7 percent from 37.6 percent. Those predicting declines rose to 12.0 percent from 10.4 percent.
This week may bring more economic data showing further improvement. Statistics Canada will report February employment data on March 7, with economists surveyed by Bloomberg through today projecting that 15,000 jobs were created last month. Economists also forecast the trade deficit narrowed in January.
January readings showed industrial product prices climbed 1.4 percent and raw material product prices advanced 2.6 percent, the statistics agency said today from Ottawa.
Bank of Canada Governor Stephen Poloz will probably keep his benchmark interest rate at 1 percent in a March 5 decision, according to a separate Bloomberg News survey.
Poloz said in a Feb. 22 interview he’s encouraged by recent signs of higher business creation and inflation moving closer to his 2 percent target. Central bank policy makers have also said it will take about two years for the economy to return to full output because of weak investment and exports.
“The modest gains in confidence are likely to be transitory,” said Joseph Brusuelas, senior economist at Bloomberg LP in New York.
Bloomberg Nanos’s confidence index has two sub-indexes: the Pocketbook Index, based on survey responses to questions about personal finances and job security, and the Expectations Index, based on responses on the outlook for the economy and real-estate prices.
The Pocketbook Index rose last week to 61.3 from 60.1 and the Expectations Index rose to 55.9 from 55.1.
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 within 3.1 percentage points, 19 times out of 20.