Quebec Election Stems Gain in Canadian Consumer Sentiment

Quebec’s election campaign is helping stem recent gains in Canadian consumer confidence, weekly polling indicates, amid escalating talk of a referendum on secession by the French-speaking province.

The Bloomberg Nanos Canadian Confidence Index fell to 58.4 in the week ending March 14 from a prior reading of 59.2, halting four weeks of gains, according to the survey-based measure. Confidence fell the most in Quebec, where an election campaign is under way that polls show may return the separatist Parti Quebecois to power with a majority government.

The week was marked by heightened concerns the separatist party would hold a referendum if it wins the April 7 vote, with Premier Pauline Marois sketching out elements of what an independent Quebec might look like during campaign stops. The entry of media executive Pierre-Karl Peladeau into the race as a candidate for the Parti Quebecois has also galvanized separatists.

“The beginning of the Quebec provincial campaign has been marked by speculation of separation of Quebec from Canada,” said Nik Nanos, chairman of Nanos Research Group.

The decline in the Canadian index was led by worsening sentiment in Quebec, where the provincial score fell to 57.1 from 59.2. Sentiment in Ontario, which borders Quebec and is Canada’s most populous province, also declined.

Canadians are bracing for another round of debate about whether Quebec should remain a part of the country or form a separate nation, an idea twice tested in province-wide referendums, failing in 1980 and more narrowly in 1995. The Parti Quebecois has pursued sovereignty since the late 1960s.

Escalating Talk

Talk of a referendum escalated after Peladeau, the biggest shareholder of Quebec’s largest media company and one of the province’s most powerful entrepreneurs, announced he will run for the Parti Quebecois and revealed he’s a separatist.

Peladeau, who spent 14 years as chief executive officer at Montreal-based Quebecor Inc., said March 9 he will run for the Parti Quebecois because he wants Quebec to become a separate country.

The 52-year-old Peladeau resigned as vice chairman and board member from Quebecor, a company founded by his father Pierre that owns the province’s largest circulation newspaper and its most watched television network. Peladeau said he would put his stake in the company in a blind trust if he’s elected.

Above Average

A survey by Leger Marketing for the Globe and Mail newspaper published on the weekend showed the Parti Quebecois and opposition Liberal Party tied with 37 percent support. The online survey of 1,205 people was taken March 11-13, after Peladeau announced his candidacy. A sample of this size has a margin of error of 2.8 percent.

In the same survey, 59 percent of respondents said they would vote against separation, while 41 percent said they would support it.

Consumer confidence in Canada had risen to three-month highs before last week as sentiment was buoyed by rising share prices, higher home values, gains in commodity prices and signs of accelerating growth. Statistics Canada reported March 14 that household net worth rose 3 percent in the fourth quarter to a record.

The sentiment gauge for Quebec was at the highest since 2010 before last week. Even with the drop, scores in Canada and Quebec remain above average levels over the past six months.

The decline last week was led by a deteriorating outlook for real estate, the survey found. The proportion of respondents who anticipate a decline in real-estate prices in their neighborhood rose to 14.3 percent, the highest since September. Those forecasting an increase fell to 37.6 percent from 39.4 percent.

Real Estate

Canadian existing home sales in February rose 0.3 percent from January, with prices jumping 10.1 percent from a year earlier, the Canadian Real Estate Association said today.

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 fell last week to 61.0 from 62.1 and the Expectations Index fell to 55.8 from 56.4.

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.

The proportion of survey respondents who described their job as secure fell to 68.7 last week, after reaching the highest since the end of 2011 the previous week.

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