Canadian Consumer Confidence in Holding PatternAndrew Mayeda
Canadian consumer sentiment is in a holding pattern amid mixed signals about the strength of the nation’s economy.
The Bloomberg Nanos Confidence Index measured 59.5 in the week ended May 9, little changed from the previous reading of 59.6. The survey-based index hit a four-year high of 60.1 on April 25.
Employment unexpectedly declined in April, dropping for the second time in three months, Statistics Canada reported May 9. The number of jobs fell by 28,900 last month, compared with a projected increase of 13,500 based on the median forecast of a Bloomberg survey of economists.
“The net change in employment is trending lower and has moved below its long-term average for the first time in the post-financial crisis era,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Payroll earnings growth is also holding below its five-year average, making the stock market and developments in the western provinces “key determinants of consumer sentiment and spending,” he said.
While job growth has sputtered, the country’s housing market is showing strength. Housing starts rebounded faster than economists forecast in April on an increase in multiple-unit projects, the housing agency reported May 8.
The Bank of Canada says it’s seeing a “gradual strengthening” of the economy following a severe winter that damped production. The country’s recovery hinges on an upturn in exports and investment, the central bank said last month in keeping its benchmark interest rate at 1 percent.
Declines in consumer sentiment in Ontario and Quebec were a major factor behind the stagnation in the national figures, said Nik Nanos, chairman of Nanos Research Group in Ottawa. Voters in Ontario, the nation’s most populous province, face an election June 12 after Premier Kathleen Wynne’s Liberals couldn’t secure enough support for her minority government’s budget earlier this month.
Confidence also dropped in the Atlantic provinces, while rising in the Prairies and British Columbia.
The benchmark Standard & Poor’s/TSX Composite Index posted its first weekly decline in four weeks last week, a drop of 1.6 percent, while the Canadian dollar was 0.2 percent stronger over that period.
Bloomberg Nanos’s confidence index has two sub-indexes: the Expectations Index, based on responses on the 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 59.7 last week from 60.0, while the Pocketbook Index dropped to 59.2 from 59.3.
The percentage of respondents who say they’ve become worse off financially over the past year rose to 25.5 percent from 24.7 percent.
Perceptions about the economy’s strength remain elevated. The share of survey respondents who say the economy will improve in the next six months was little changed at 24.3 percent, compared with an average 21.5 percent this year.
The share of those saying their jobs are secure or somewhat secure climbed to 64.8 percent from 64.1 percent, while those who felt somewhat not secure or not at all secure rose to a 10.7 percent share, from 10 percent.
The proportion of survey respondents who believe home values in their neighborhood will rise over the next six months fell to 41.6 percent last week, the lowest in a month, from 42.8 percent the week before.
Statistics Canada reports manufacturing sales for March on May 15, and international securities transactions the following day. In terms of housing data, the Teranet/National Bank home price index for April will be released May 14 and the Canadian Real Estate Association will give its report on existing home sales the next day.
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.