Recovery in Canadian Consumer Confidence Shows Signs of Cooling

Canada‘s quick initial rebound in consumer confidence is showing signs of slowing, the most recent indicator to suggest there’s a long road ahead for a full economic recovery from the pandemic.

The Bloomberg Nanos Canadian Confidence Index, a composite measure of financial health and economic expectations, was little changed at 52.7 last week, from 52.8 a week earlier. This is the first stall in the index since early July, though it remains above 50, meaning views on the economic backdrop are net positive.

The index has been trending higher in recent weeks with most provinces lifting even more restrictions on the economy. The housing market has also heated up over the summer, helping to drive gains in the broader index.

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However, other recent indicators like the pace of job openings suggest the rest of the economic recovery is likely to take a long time while restrictions remain on businesses and social gatherings.

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June and July showed a strong rebound after gross domestic product plunged by an annualized 38.7% in the second quarter, the most ever. Still, Canada‘s economy isn’t expected to fully make up the losses until 2022.

Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security and their outlook for the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 responses.

Survey Highlights

• Sentiment improved in three of the four subcomponents last week: personal finances, job security and real estate

• The outlook on the domestic economy became slightly more pessimistic, with 47.4% of respondents saying it would be weaker in the next 6 months, and 23% saying it would be stronger

• Ontario, Quebec and the Atlantic provinces posted increases in sentiment while decreases were observed in British Columbia and on the Prairies

• Canadians continue to become more bullish on the housing market, with 40% of respondents expecting the value of real estate in their neighborhood to increase in the next six months. Thats the highest percentage since mid-March before the pandemic shut down the economy