Canadian consumer confidence remained subdued in May as global market turmoil eroded sentiment.
The Bloomberg Nanos Canadian Confidence Index, a composite gauge based on telephone surveys, dipped last month as households reported increasing worries about their personal finances. It was a month rocked by volatility in financial markets.
Household sentiment has been depressed for much of 2018 as a series of economic headwinds hit the nation’s economy, including higher interest rates and concern about the housing market. Canadians have also been grappling with the fallout from political turmoil inside and outside of the country, starting with the pipeline dispute between Alberta and British Columbia, and what look to be stalled Nafta negotiations.
“The economic mood in Canada has been mired in uncertainty and controversy,” said Nik Nanos, chairman of the Nanos Research Group. “Considering the importance of both Canada-U.S. trade and the energy sector to the Canadian economy, it shouldn’t be a surprise that the mood is generally dour.”
The index ended May at 57.5, down from 57.9 in April, but higher than the 56.8 in March. It touched 62.2 at the end of December, close to a record. When compared to year-earlier levels, the index has dropped for four straight months -- something that hasn’t happened since 2015.
The biggest point of weakness last month was with impressions on personal finances. Of those surveyed over the past four weeks, 28.2 per cent said their personal finances have worsened in the past year. That was the most-pessimistic end of month reading since April 2017. The survey also showed a slight deterioration in perceptions of job security and real estate, though readings for these two questions are in line with six-month averages.
Even with the moderate weakness in May, sentiment appears to have stabilized from the much the sharper declines earlier this year.
There are signs the economy is returning to a stronger footing than it’s been on more recently, helped partly by stronger commodity prices. Prime Minister Justin Trudeau’s intervention in the pipeline dispute, with the government agreeing to buy Kinder Morgan Canada Ltd.’s Trans Mountain oil pipeline, may be affecting confidence.
Regionally, Quebec and the Prairie provinces recorded declines in sentiment in May, while British Columbia and Ontario saw gains.