Ottawa – Although the Index of Consumer Confidence remains above where it was at this time last year, the recent trend in the national index has been negative. With a 1 point drop to 85.9 in July 2014, The Conference Board of Canada’s Index of Consumer Confidence has now dropped for three consecutive months.
Attitudes toward future job creation continue to be the major factor weighing on consumer confidence. There are still significantly more people who expect fewer jobs in their communities going forward than those who expect to see more jobs.
On a national basis, only 15.9% of respondents said they expect there to be more jobs in six months’ time. That is 1.2 percentage points lower than last month and slightly below where it was at this time last year. And 22.7% responded that they expect there to be fewer jobs in six months—2.5 percentage points higher than in June.
In Atlantic Canada, the pessimism has reached a dire level. Only 5.9% of respondents (4.3 percentage points fewer than last month) said they expect more jobs in their communities six months from now. That was the weakest response on this question since 1996, suggesting that consumer spending faces an uphill battle in Atlantic Canada over the next six to eight quarters.
Responses on the major purchases question also deteriorated. When asked if they thought now was a good time to purchase a major item, such as a car or home, the share of Canadians who said it was a bad time increased to 39.4%, up from 38.5% in June. This negative attitude toward major purchases reflects a combination of factors. First, despite interest rates being at historical lows, many Canadian households continue to work to lower their debt levels, suggesting that household disposable income is being diverted from spending to debt reduction. Second, warnings of an overvalued housing market (outside of the Prairies) have been widely reported in the media over the past year, and that could be starting to put negative pressure on home buying. And third, labour market performance continues to languish (again, outside of the Prairies); when consumers have little faith in job opportunities, they are less likely to make a major outlay on a home or new car.
Western provinces lead the pack in confidence
Regionally, the Western provinces continue to lead the pack by a wide margin. Despite a 9.9-point drop this month (driven primarily by negative movements on the jobs and major purchases questions), the index in British Columbia is still at 105.9. This is only slightly below the Prairies, where confidence climbed 4.5 points to 107.8 as sentiment on job creation there continued to improve.
After two consecutive months of significant declines, confidence in Quebec rebounded with an 8 point increase in July. Ontario’s index dropped 0.7 points to 74.9 in July after posting a substantial increase in June. Results in Atlantic Canada continue to lag even those in underperforming Central Canada. With a 6.2-point decline to 72.9 this month, the region managed to erase in just one month most of the gains made so far this year.
This month’s survey was conducted between July 3 and July 14, 2014, and the margin of error is plus or minus 2.1%.