What to make of Canada's GDP data
Canadian consumer confidence levels remained steady in January at about historical averages, a reassuring sign for an economy suffering from a bout of sluggish growth.
The Bloomberg Nanos Canadian Confidence Index, a composite gauge based on weekly telephone polling, ended the month at 56.4, little changed from the final reading of 2019, as fewer respondents expressed concern about the economic outlook.
Household sentiment appears to be holding onto December gains. It dropped sharply in October and November, reflecting worries about a divisive federal election that produced a fragmented parliament, as well as an economic slowdown that saw growth come to a near halt.
But the weakness in sentiment is so far proving temporary.
The share of respondents who see the economy weakening over the next six months fell to 27.9 per cent, from 34.2 per cent at the end of 2019. The reading is below the average over the past year, and at about historical averages. Those who see the economy strengthening, meanwhile, rose to 15.6 per cent, from 13.4 per cent. The gap between optimists and pessimists, at 12.3 percentage points, is the narrowest since early November.
Things are also looking better, sentiment-wise, on the prairies, which recorded a gain in confidence in January compared with the prior month. The energy-rich region had seen the biggest drop in sentiment after October’s election on concern Prime Minister Justin Trudeau’s Liberals Party would prioritize environmental concerns over those of the oil industry.
The state of Canada’s households have become a central focus for analysts, as consumers show signs of scaling back spending. That’s raising concern the current economic downturn could drag on longer and be deeper than expected.
Bank of Canada officials highlighted these concerns at an interest rate decision last month, prompting investors to ramp up bets the central bank will cut borrowing costs.
Every week, Nanos Research calls 250 Canadians for their views on personal finances, job security and their outlook for both the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 telephone responses.
It wasn’t all positive news in the survey. Only 60.7 per cent of Canadians said they felt at least somewhat secure in their job. That’s down from 66.7 per cent at the end of last year. Sentiment on real estate prices was little changed over the past month at relatively elevated levels.
--With assistance from Erik Hertzberg.