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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 – a sign that many are involved about employment at a time when the country’s unemployment rates are running at a two-year high.
Given that uncertainty, it’s not surprising that Canadians continue to be reluctant to consider big-ticket purchases – like residential property and new vehicles – particularly those in provinces hardest hit through the collapse in oil prices, such Alberta, Saskatchewan and parts of the Atlantic region.
Surveys of households taken between February and early March, however, show consumers are a little more optimistic in British Columbia, Ontario and Quebec.
The Conference Board of Canada’s consumer confidence index, released Monday, showed the general mood of shoppers improved – though only slightly – between Feb. 1 and 11, rising 3.7 points to a reading of 83.7, marking the very first increase in 3 months.
Still, Canadians’ view of their current financial state deteriorated within the same period of time, based on the Ottawa-based think-tank, and consumers’ look at major purchases “remains highly negative” in an elevated degree of 50.3 percent.
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Any improvement on plans for buying expensive items was mainly observed in Ontario and Quebec, the Conference Board said, based on 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 your region falling 4.3 points in February – the 3rd straight survey decline.
“The situation is gloomier in 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 within the other half of 2014 and resulted in a recession in Canada in the first half 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 – according to phone interviews with 1,000 Canadians throughout the week ending March 4 – declined to a reading of 53.4, from 53.6 in the last poll. The group’s 12-month average is 55.1 per cent.
Those who see their jobs as being secure fell 1.6 suggests 51.8 percent, the largest decline in three month.
“Perceptions related to employment – a measure which is traditionally quite steady – realized downward movement over the past week and merits monitoring,” said Nik Nanos, chairman of Nanos Research Group, also based in Ottawa.
Not surprisingly, weaker appetite for big purchases in an uncertain economy could be traced to concern over future employment prospects.
“For that third consecutive month, consumers’ sentiment about future job prospects within their community deteriorated,” the Conference Board said, with 36.5 per cent anticipating fewer employment opportunities, up from 35.8 per month earlier – with the largest percentage of negative responses arriving Alberta.
Canada’s economy grew 1.2 per cent last year, down from the 2.4-per-cent annual rise in 2014. But 2015 ended having a a spurt in December – gaining 0.2 per cent, much better than expected and providing a stronger handover to 2016.
The unemployment rate, meanwhile, rose to 7.2 percent in January, the highest level since 2014, from 7.1 percent in December. Statistics Canada will release its February labour force survey on Friday.
gisfeld@nationalpost.com
Twitter.com/gisfeld
