Canadian consumer confidence rising ahead of Bank of Canada update

Theglobeandmail.com
April 11, 2016
By Greg Quinn

Consumer sentiment rose for a third week in Canada as an improving economy and job market restore incomes.

The Bloomberg Nanos Consumer Confidence Index climbed to 55 from 54.7 in the week ending April 8, the highest this year. The share of respondents who said they expect the economy to improve in six months rose to 25.4 per cent, the highest since December.

The gain in confidence adds to a string of recent reports that suggest the economy is recovering from the oil price collapse, including jobs data released Friday that showed employment rose in March four times faster than economists predicted. Another vote of confidence may come from Bank of Canada Governor Stephen Poloz, who will provide a state of play of the nation’s economy Wednesday following an interest-rate decision.

“I feel quite good about consumer sentiment,” David Williamson, group head of retail and business banking at Canadian Imperial Bank of Commerce, said in an April 4 interview in Vancouver. “It’s not just on the mortgage side. On the lending side, on the card side, on the deposit side we’re seeing really robust volumes.”

Nanos Research conducts weekly polling of 250 people based on their economic outlook, personal finances, real estate expectations and job security, creating a four-week rolling average of 1,000 respondents. The Bloomberg Nanos Consumer Confidence Index is a gauge built from the survey responses.

The improvement in sentiment is in line with other reports that show an improving outlook. Employment jumped by 40,600 new positions in March, quadrupling the median forecast, Statistics Canada said Friday. A week earlier the agency reported the fastest monthly economic growth since 2013, while recent data on housing, retail and manufacturing have exceeded expectations. A poll of executives taken by the central bank and released last week also found recovering business spending plans.

Positive signals for businesses “could translate into increased consumer confidence and household spending,” said Robert Lawrie, an economist at Bloomberg.

The share of people who say their jobs are secure rose to 50 per cent from 48.8 per cent, the first gain since February. Confidence in the housing market stayed close to the highest since December, 2014.

The drop in commodity prices, which the central bank estimates has cost C$1,800 ($1,400) in lost income per capita, is still showing up in the polling. The share of people who say their finances have improved over the past year – at 12.1 per cent is down for a fourth straight week.