OTTAWA – As the Canadian economy entered 2016 with a little more oomph than anticipated, consumers still appear reluctant to open their wallets and start spending more – an indication that many are involved about job security at a time once the country’s unemployment rates are running in a two-year high.
Given that uncertainty, it’s unsurprising that Canadians continue to be reluctant to consider big-ticket purchases – like house and new vehicles – particularly those in provinces hardest hit by the collapse in oil prices, such Alberta, Saskatchewan and parts of the Atlantic region.
Surveys of homes taken between February and early March, however, show individuals are slightly more optimistic in Bc, Ontario and Quebec.
The Conference Board of Canada’s consumer confidence index, released Monday, showed the overall mood of consumers improved – though only slightly – between Feb. 1 and 11, rising 3.7 suggests a reading of 83.7, marking the first increase in 3 months.
Still, Canadians’ look at their current financial state deteriorated within the same time period, according to the Ottawa-based think-tank, and consumers’ look at major purchases “remains highly negative” in an elevated level of 50.3 per cent.
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Any step up from plans for purchasing expensive items was mainly seen in Ontario and Quebec, the Conference Board said, according to a web-based survey of more than 3,000 Canadians. “While encouraging, increases weren’t enough to counterbalance the declines recorded in the last 8 weeks.”
Consumers in Atlantic Canada appear more downbeat, using the board’s sentiment index for that region falling 4.3 points in February – the third straight survey decline.
“Everything is gloomier within the Prairies,” the board said, showing a general reading of 42.4, down from 44.8 in the January survey. In Alberta – the epicentre from the energy boom and bust that began in the second half of 2014 and resulted in a recession in Canada within the first 1 / 2 of 2015.
A second survey, also released Monday, showed a stop by consumer confidence – again, probably the most negative region was the Prairies.
The Nanos Research Group said its overall confidence index – based on phone interviews with 1,000 Canadians throughout the week ending March 4 – declined to some reading of 53.4, from 53.6 in the last poll. The group’s 12-month average is 55.1 percent.
Those who see their jobs to be secure fell 1.6 points to 51.8 per cent, the largest decline in three month.
“Perceptions associated with employment – a measure which is traditionally quite steady – realized downward movement in the last week and merits monitoring,” said Nik Nanos, chairman of Nanos Research Group, also based in Ottawa.
Not surprisingly, weaker appetite for giant purchases within an uncertain economy can be traced to concern over future employment prospects.
“For that third consecutive month, consumers’ sentiment about future job prospects in their community deteriorated,” the Conference Board said, with 36.5 per cent anticipating fewer employment opportunities, up from 35.8 a month earlier – using the largest number of negative responses coming in Alberta.
Canada’s economy grew 1.2 percent last year, down from a 2.4-per-cent annual increase in 2014. But 2015 ended having a a bit of a spurt in December – gaining 0.2 percent, better than expected and providing a greater handover to 2016.
The unemployment rate, meanwhile, rose to 7.2 percent in January, the highest level since 2014, from 7.1 per cent in December. Statistics Canada will release its February labour force survey on Friday.
gisfeld@nationalpost.com
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