Trudeau Child Benefits Buoy Consumer Confidence as Worries Mount

  • Canada sentiment index nears 2016 high on personal finances
  • Clouds on horizon with job security at lowest in 2 1/2 years

New government child payments and financial-market gains are sustaining Canadian consumer sentiment, even amid signs of deeper concerns for households, telephone polling suggests.

The Bloomberg Nanos Canadian Confidence Index climbed to 57.5 in the week ended July 22, the third straight gain. Improved scores around personal finances drove the increase, buttressing a worsening outlook for job security. The index is derived from survey responses on personal finances, job security and the outlook for the economy and real estate prices.

Prime Minister Justin Trudeau’s government started delivering enhanced family benefit payments last week. The program, worth thousands of extra dollars annually for some families, was a key promise in last year’s election campaign and will increase transfers to households by an additional C$10 billion ($7.6 billion) over two years, according to government estimates.

Canadian stocks meanwhile have recorded four straight weeks of gains, with the benchmark S&P/TSX Composite Index up 12 percent this year.

The upshot is people are feeling better about their personal finances. The share of respondents who reported a deterioration fell to 23.1 percent, the lowest since June 2015, and 15.1 percent say they’re better off, in line with the average over the past several months.

Growing Unease

Still, the polling shows growing unease in other aspects of household confidence. Those describing their jobs as secure fell to a 63.8 percent share, the lowest since January 2014. While the outlook for real estate remains at relatively high levels, perceptions about home prices have come down in recent weeks after a recent surge.

Expectations about the economy have also dimmed, with only 21.7 percent of respondents saying they expect it to strengthen. That’s the lowest since March.

The Bloomberg Nanos Canadian Confidence Index is based on telephone polling with a rolling four-week average of 1,000 respondents. It’s considered statistically accurate within 3.1 percentage points, 19 times out of 20, with larger margins of error for regional breakdowns.

Here are other trends captured by the survey last week:

*At 57.5, the Bloomberg Nanos Canadian Confidence Index is at about its average since May, and above levels recorded earlier this year.

*Sentiment increased in every region except British Columbia, where confidence has come down sharply since touching a record in May. The province’s confidence score still leads the country however.

*Confidence in the prairie provinces Alberta, Saskatchewan and Manitoba reached the highest since November.

*The decline in job security to 63.8 percent has been sharp, falling from 71.5 percent at the end of April. It’s the biggest decline over a three month period since 2012, when the measure fell to record lows.

*Sentiment on real estate is still relatively high. The share of Canadians who expect prices to gain was 42 percent, up from 41.5 percent in the prior week but down from the 44.8 percent it reached in June. Still, the 12-month average is about 36 percent.

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