Confidence on Oil-Rich Canada Prairies Hits Lowest Since '08By
Prairies region includes Alberta's oil-dependent economy
Nationwide, Bloomberg-Nanos confidence index is unchanged
Sentiment among consumers in Canada’s commodity-rich prairie provinces dropped to the lowest since 2008, data from weekly telephone polling show, as prices for resources such as crude oil remain depressed.
The Bloomberg Nanos Confidence Index for the three prairie provinces -- Alberta, Saskatchewan and Manitoba -- fell to 47.7 in the period through Friday, from 49.5 previously. That’s lower than the February reading of 49.2 that coincided with a drop in New York crude futures to below $50 a barrel. Prairie confidence had recovered as oil prices rose to as high as $56.1 in May, before slipping again with the latest round of weakness.
West Texas Intermediate futures traded below $45 a barrel Monday after falling 2.8 percent Friday on predictions by Goldman Sachs Group Inc. the endurance of the oil surplus could push prices down to $20 a barrel.
Investment in Alberta’s energy industry has plunged this year as oil at these levels makes many sites unprofitable. Alberta’s crude deposits make up the bulk of Canada’s reserves which are the world’s third-largest, as well as being among the most expensive to extract. Prairie farmers are also grappling with the effects of a drought in the region, further crimping confidence.
The Nanos survey showed consumer sentiment nationwide was unchanged at 53.3, close to the Aug. 7 reading of 52, the low this year. Increasing optimism about the future of the national economy was offset by a decline in sentiment about local housing markets.
“The overall forward mood in Canada remains net negative”, said Nanos Research Group Chairman Nik Nanos.
The percentage of respondents who said the economy will be stronger in six months rose to 14.8 percent, the highest since July 3. Those who feel home prices will decrease in the next six months rose to 17.1 percent, from 16.5 percent a week earlier and the highest since mid-April.
Every week, Nanos Research asks Canadians for their views on personal finances, job security, the outlook for the economy and where real estate prices are headed. The survey, based on phone interviews with 1,000 people, uses a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points, 19 times out of 20.
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