Confidence drops to its lowest point since the start of the pandemic
Index of Consumer Confidence
The Index of Consumer Confidence tumbled 12.4 points in August – its lowest point since April 2020.
- During August , the Consumer Confidence Index dropped to 61.2, down from 73.6. This is its largest single month-to-month drop this year.
- Consumers’ outlooks on their current finances revealed a decline in optimism in August. The proportion of individuals perceiving their current finances as better decreased by 3.2 percentage points to 10.0 per cent of respondents. Simultaneously, there was a marginal increase of 1.4 percentage points in those perceiving their finances as the same – rising from 51.4 per cent to 52.8 per cent. Lastly, the proportion of respondents viewing their current finances as worse increased slightly, climbing from 32.9 per cent to 34.6 per cent.
- Respondents’ outlooks on future finances indicated a decline in optimism, with the percentage of individuals expecting improved future finances decreasing from 16.0 per cent to 14.7 per cent. Concurrently, there was a slight uptick in those anticipating consistent future finances, rising from 50.2 per cent to 51.3 per cent. Additionally, the proportion of respondents foreseeing future financial challenges increased from 23.6 per cent to 25.6 per cent.
- Perceptions regarding future job prospects underwent notable shifts in August. The percentage of individuals expecting an increase in job opportunities decreased from 12.6 per cent to 10.9 per cent. Meanwhile, those foreseeing the same number of job opportunities declined from 54.6 per cent to 50.4 per cent. Conversely, there was a notable increase in the proportion of respondents anticipating a decrease in future job availability. This proportion rose 4.8 percentage points from 20.3 per cent to 25.1 per cent.
- Sentiments around big ticket purchases exhibited a negative trend in August. The percentage of individuals viewing now as opportune for a major purchase decreased from 10.4 per cent to 8.7 per cent. Additionally, there was a modest increase in the proportion of respondents uncertain whether now is a good or bad time for major purchases. The percentage grew from 21.5 per cent to 23.1 per cent.
Insights
Inflation news may have reinforced fears that further interest rate hikes are required
Recent inflation reports may have intensified concerns about the necessity for further interest rate adjustments from the Bank of Canada. This is notably due to the year-over-year uptick to 3.3 per cent in July, following the positive news of a brief decline to 2.8 per cent in June.
The recent increase in inflation may have raised consumers’ doubts about the Bank’s ability to efficiently steer inflation back to the targeted range. This uncertainty could foster expectations of impending rate hikes, eroding consumer confidence in the process.
August’s announcement of increased unemployment was mirrored in consumers’ confidence
In August, a noteworthy shift toward pessimism regarding future job opportunities was observed at the national level, with just over a quarter of respondents indicating an expectation of reduced job availability in the future. Last month’s announcement of a rise in Canada’s unemployment rate to 5.5 per cent, coupled with the loss of over 6,000 jobs last month, underscores this trend.
The announcement of job losses after months of continuous growth has likely influenced perceptions. This has impacted not only those directly affected by the job cuts but also individuals ready to enter the workforce, causing them to anticipate difficulty in their job search. If subsequent labor market reports continue this narrative, consumer confidence could fall further.
Alberta
The index dropped by 12.3 points.
This month, current finance outlooks saw a reduction in the percentage of individuals perceiving their current finances as better, moving from 6.9 per cent in July to 5.3 per cent in August. Likewise, the segment believing their finances remained unchanged experienced a decrease from 57.9 per cent to 50.1 per cent. Conversely, the proportion of respondents who regarded their current finances as worse witnessed an increase, rising to 42.7 per cent from 33.1 per cent. Looking ahead to future financial prospects, optimism has waned as the proportion expecting improved finances declined from 14.0 per cent to 10.8 per cent. Whereas those predicting unaltered circumstances increased from 48.2 per cent to 51.0 per cent. Pessimistic sentiment regarding future finances heightened, with the group anticipating worse financial situations rising from 25.1 per cent to 30.1 per cent.
In terms of future job prospects, the belief in increased job opportunities dropped from 8.9 per cent to 4.3 per cent. Those respondents foreseeing stability in job availability decreased from 54.5 per cent to 50.5 per cent, and concerns regarding fewer job opportunities grew from 25.1 per cent to 29.9 per cent. Lastly, the outlook on major purchases displayed a slight shift with a rise in those considering it a good time for such expenditures. The proportion holding this view increased from 9.1 per cent to 10.5 per cent, while the portion expressing it as a bad time decreased from 63.3 per cent to 61.3 per cent.
Atlantic provinces
Index dropped by 13.7 points.
Current finance outlooks saw significant shifts. The proportion who believed their current finances had improved, decreased from 13.3 per cent to 7.7 per cent. The proportion with unchanged finances increased from 41.0 per cent to 44.5 per cent. Those that believed their finances were worse grew from 42.8 per cent to 46.6 per cent. Looking ahead, optimism about improved future finances decreased 4.0 percentage points from 16.1 per cent to 12.1 per cent, while the expectation of unchanged finances increased 5.6 percentage points from 41.7 per cent to 47.3 per cent.
Concerns about worse future finances notably increased 8.5 percentage points from 27.2 per cent to 35.7 per cent. In terms of future job prospects, optimism about more jobs increased from 8.1 per cent to 12.0 per cent. Those respondents foreseeing the same job numbers decreased from 54.9 per cent to 46.2 per cent. Concerns about fewer job opportunities decreased slightly from 26.8 per cent to 26.6 per cent. Finally, regarding major purchases, the percentage viewing it as a good time for a major purchase decreased from 9.5 per cent to 7.7 per cent. Those seeing it as a bad time increased from 64.0 per cent to 72.8 per cent. Uncertainty about major purchases also decreased from 25.8 per cent to 19.5 per cent.
British Columbia
The index dropped by 25.5 points.
Current finance outlooks experienced a decrease in the percentage of individuals perceiving their current finances as better, dropping 7.6 percentage points to 6.9 per cent. Simultaneously, the proportion holding the view that their finances would remain unchanged increased from 45.0 per cent to 52.2 per cent to become the majority view. Contrarily, the proportion of respondents who deemed their current finances worse experienced a slight decrease, moving from 39.2 per cent to 38.3 per cent. Regarding future financial perspectives, the optimism regarding improved finances has slightly diminished from 14.8 per cent to 14.0 per cent. Meanwhile, the expectation of unchanged future finances decreased from 49.3 per cent to 48.6 per cent. Conversely, there has been an uptick in pessimistic sentiment about future finances, with the proportion anticipating worse financial situations increasing from 3.1 percentage points to 29.8 per cent of respondents. Turning to future job prospects, the belief in increased job opportunities saw a decrease from 16.3 per cent to 12.1 per cent (a 4.2 percentage point drop). Those anticipating the same number of jobs dropped 7.5 percentage points to 46.6 per cent.
On the other hand, concerns about fewer job opportunities in the future increased notably from 17.6 per cent to 27.9 per cent – a 10.3 percentage point bump. Lastly, in terms of major purchases, the percentage of those considering it a good time for such expenditures decreased from 10.7 per cent to 8.7 per cent, while the segment expressing it as a bad time slightly decreased from 68.7 per cent to 67.9 per cent. The proportion who are uncertain if now is a good or bad time for major purchases saw a modest increase, rising from 20.6 per cent to 23.4 per cent.
Ontario
The index dropped 9.9 points.
In August, Ontario consumers reported a decline in current financial confidence. Respondents perceiving improvement in their finances decreased from 13.8 per cent to 9.6 per cent. In turn, the proportion who perceived their financial circumstances as unchanged grew 2.1 percentage points to 52.1 per cent. Those respondents seeing a deterioration rose 1.4 percentage points to 34.8 per cent.
Similar shifts appeared in future financial outlooks, as positive and negative sentiments both expanded by 0.9 per cent. Notably, 15.5 per cent of respondents anticipated improved future finances, while 25.8 per cent expressed concern. Those with future financial outlooks of stability maintained a majority at 50.2 per cent, albeit down 0.7 per cent from the month prior. Future job prospects saw pessimism with 0.9 percentage points fewer – down from 12.0 per cent expecting more jobs.
Those expecting the same number of jobs experienced a 4.6 percentage point drop to 47.5 per cent, and the proportion expecting fewer jobs increased 4.9 percentage points to 28.5 per cent. Lastly, major purchase expectations turned more negative with 8.5 per cent – down from 11.6 per cent – considering it a good time for a major purchase and 65.9 per cent – up from 64.8 per cent – deeming it a bad time.
Quebec
The index dropped 15.7 points.
In Quebec’s August assessment, a prevailing sense of pessimism marked various categories. Future job prospects experienced a notable shift, with a 4.4 percentage point increase to 16.2 per cent in those respondents anticipating fewer jobs. This was coupled with a 2.8 percentage point drop from 15.3 per cent to 12.5 per cent in those expecting more jobs and a 1.8 percentage point decline to 59.1 per cent in those predicting job stability. Similar trends were visible in current finances, where the proportion perceiving worsened financial conditions rose by 2.6 percentage points to 26.4 per cent.
Meanwhile, those seeing improvement decreased by 0.5 percentage points to 13.8 per cent, and those observing no change dropped by 1.8 percentage points to 57.9 per cent. Likewise, future financial expectations dimmed, as those expecting worsened financial situations increased by 2.3 percentage points to 19.0 per cent. Those respondents expecting stability grew by 0.9 percentage points to 55.6 per cent, and those anticipating improvements declined by 3.1 percentage points to 16.3 per cent.
Notably, major purchases stood as the exception, trending toward uncertainty. The group deeming it an opportune time for a significant purchase decreased by 1.4 percentage points to 7.7 per cent. Respondents regarding purchasing as an inopportune time dropped by 1.0 percentage points to 76.4 per cent, while uncertainty rose by 2.4 percentage points to 15.9 per cent.
Saskatchewan–Manitoba
Index increased by 8.8 points.
Current finance outlooks experienced a notable shift in perceptions in August. The percentage of individuals perceiving their current finances as better increased from 13.5 per cent to 15.1 per cent. Those considering their finances to remain the same rose 9.8 percentage points from 43.4 per cent to 53.2 per cent. On the other hand, the proportion of respondents deeming their current finances as worse has seen a decrease, declining from 37.4 per cent to 28.8 per cent. Transitioning to future financial perspectives, the number of respondents who are optimistic regarding their finances has decreased from 17.9 per cent to 15.1 per cent. The proportion anticipating unchanged future finances has increased from 44.1 per cent to 53.4 per cent.
Further, pessimistic sentiment about future finances has diminished, with the proportion foreseeing worse financial situations decreasing from 27.3 per cent to 21.4 per cent. Focusing on future job prospects, the proportion that believe in increased job opportunities rose from 10.0 per cent to 12.3 per cent, while those foreseeing the same number of jobs rose from 48.6 per cent to 49.6 per cent. Additionally, the proportion with concerns about fewer job opportunities in the future decreased from 21.2 per cent to 20.9 per cent. Lastly, in terms of major purchases, the percentage of those considering it a good time for such expenditures has increased from 10.3 per cent to 11.3 per cent, while the group expressing it as a bad time has decreased from 65.9 per cent to 60.6 per cent. There has also been a noticeable increase in the proportion with uncertainty regarding the opportune time for major purchases, rising from 23.8 per cent to 28.1 per cent.
National and Provincial Data
The consumer confidence survey has been ongoing since 1960. It is conducted monthly by Signal49 Research and is administered by Leger.
The Index of Consumer Confidence is constructed from responses to four attitudinal questions posed to a sample of Canadian households.
Those surveyed are asked to give their views about their households‚ current and expected financial positions and the short-term employment outlook.
They are also asked to assess whether now is a good or a bad time to make a major purchase such as a house, a car, or other big-ticket items.
The latest results are based on responses to our online survey of over 3,000 Canadians.
Disclaimer: Forecasts and research often involve numerous assumptions and data sources and are subject to inherent risks and uncertainties. This information is not intended as specific investment, accounting, legal, or tax advice.