Gauge of Household Finances Worsens on Eve of Canada Budgetby
Nanos consumer confidence index stays below 12-month average
Prime Minister Trudeau's debut budget to be released Tuesday
The number of Canadians who say their finances are worsening hit a three-year high as Canada Prime Minister Justin Trudeau prepares to unveil a budget aimed at reviving the country’s low- and middle-income families.
The Bloomberg Nanos Consumer Confidence Index, based on weekly telephone polling, found 32.4 percent of respondents said their finances are worse off than a year earlier, up from 31.1 percent the week prior and the highest since March of 2013. The share of those who see themselves as better off declined.
Trudeau’s Liberal Party won October elections pledging to run deficits to spur economic growth and raise taxes on top earners. The prime minister’s debut budget to be released Tuesday is expected to contain a shortfall of about C$30 billion ($23 billion), and to include spending measures for infrastructure and a new child benefit program.
Consumer confidence fell nationally to 53.8, from 54 a week earlier, remaining below the 12-month average of 55. The pocketbook sub-index, measuring job security and personal finance, slid slightly while the expectations sub-index, measuring the outlook for housing and the economy, registered a small increase. Neither swung dramatically, as the country awaits news of the budget measures.
Despite souring personal finances, the overall economic outlook found signs of optimism in housing and saw Ontario, Canada’s manufacturing hub and one-time economic engine, overtake British Columbia as the country’s consumer confidence leader.
"Of note is the prospect for innovative policy and technology-driven manufacturing in Ontario, where household sentiment is near its 12-month high while sentiment in other provinces remains below average," Robert Lawrie of Bloomberg Economics said.
The index score, made up of respondents’ views on personal finances, job security, house-price expectations and overall economic sentiment, rose in Ontario to 59.2 last week, up from 58.9 a week earlier and nearing a 12-month high. Ontario is now Canada’s leader in consumer optimism, overtaking British Columbia, and Lawrie called the Ontario figure a "hopeful sign" as manufacturing employment in Canada has moved above its five-year average for the first time since the 2008-2009 recession.
Optimism around real estate, meanwhile, increased -- 34.8 percent of respondents now expect homes in their neighborhood to increase in value over the next six months, up from a 2016 low of 29.4 percent in mid-January.
Still, uncertainty about the economy continues, with the share of Canadians expecting no change in Canada’s output over the next six months rising to 38.8 percent, the highest since November, from 37.4 percent a week earlier.
The Bloomberg Nanos Consumer Confidence Index is based on a rolling four-week average of 1,000 respondents interviewed by telephone, and is considered accurate within 3.1 percentage points, 19 times out of 20. The latest round of tracking ended March 18.