Trade uncertainty will hit confidence, businesses: Economist
Canadian consumer sentiment recorded its biggest monthly setback this year in August, amid growing concerns about the global economic outlook, polling suggests.
The Bloomberg Nanos Canadian Confidence Index -- a composite indicator derived from phone surveys of households -- ended the month at 56.4, down from 58.6 at the end of July. The drop reflects waning optimism about Canada’s economy, and effectively reverses the pick up in sentiment earlier this summer. It marks the first drop in the index of more than 2 points since November 2018.
The deterioration coincides with the escalation of the U.S.-China trade war that is fueling concerns about a sharp global slowdown, with many Canadians increasingly worried they’ll soon feel a bigger impact.
The share of respondents who believe Canada’s economy will strengthen over the next six months dropped to just under 13 per cent at the end of August, from about 18 per cent a month earlier, according to polling by Nanos Research Group for Bloomberg. That’s approaching record low levels of optimism. The share who see the economy weakening increased five points to 29 per cent.
Every week, Nanos Research asks 250 Canadians for their views on personal finances, job security, the outlook for the economy and where real estate prices are headed. Bloomberg publishes four-week rolling averages of the 1,000 telephone responses.
The good news for now is that the drop in confidence is largely confined to expectations for growth, and haven’t yet hit pocketbooks. Perceptions of job security and personal finances were little changed last month at about historical averages.
Expectations for real estate prices fell in August from the 2019-high levels a month earlier, but remain at above-average levels.
Consumer confidence can be a good barometer of an economy’s overall health. The sluggish readings may amplify concern the country is headed for a second-half slowdown, after a robust first-half performance that saw growth at a robust 2.1 per cent annualized pace. The broad confidence index fell below year-earlier levels for the first time in three months in August.
Ontario, Canada’s most-populous province, recorded the biggest decline in sentiment.
--With assistance from Erik Hertzberg.