Big jump in Canadian confidence bodes well for recovery
As Canadian provinces move further ahead with their reopening plans, consumer confidence is following along.
The Bloomberg Nanos Canadian Confidence Index, a weekly composite measure of financial health and economic expectations, jumped to 45.4 last week from 42.9 a week earlier. That's the largest weekly gain since 2013.
"Consumer sentiment expectations on the Canadian economy are on the rise with a U-shaped trend line beginning to emerge," said Nik Nanos, chief data scientist, in the report. "Perceptions of the future strength of the Canadian economy -- although still net negative -- have improved 10 points in the last four weeks."
Sentiment has now been rising for eight-straight weeks, reflecting increased optimism about the economy as provinces begin allowing retailers to open and people to congregate in larger groups. Last week, Canada's two most-populous provinces moved to another phase of reopening with Ontario allowing outside dining everywhere except the Greater Toronto Region, and most of Quebec going ahead with dine-in eating.
Despite the multiweek uptick in consumer confidence, sentiment will likely take a long time to get back where they were pre-covid. In January and February, confidence levels averaged about 56.
All provinces saw an increase in confidence last week, although views on personal finances worsened in Quebec and British Columbia.
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. The index averaged 57 in the year prior to the crisis. Scores above or below 50 indicate net positive or net negative views on the economic mood of Canadians.
- Canadians views on their personal finances remain at depressed levels with only 12.3% saying their finances are better off over the past year.
- Views on the future of the economy are getting more optimistic with almost a quarter of respondents saying it will get better in the next six months; that's up from less than 7% in early April.
- Sentiment around real estate is also improving with more Canadians saying they expect home prices to increase in the next half year.