Canadian Consumer Confidence Slumps Heading Into Election Year

(Bloomberg) -- Canadians enter 2019 far less optimistic about the economy than a year earlier.

The Bloomberg Nanos Canadian Confidence Index, based on weekly telephone polling, ended 2018 at 55.1, down from 62.2 at the close of 2017. The change was driven more by Canadians’ views of the overall outlook than of their own finances -- 39.6 percent expect the domestic economy to weaken over the next six months, more than double the share that thought so a year earlier.

The numbers show that Prime Minister Justin Trudeau is entering an election year with voters feeling anxious, despite reaching a deal to update the North American Free Trade Agreement. Pessimism is strongest in the West -- in British Columbia, the economic expectations sub-index fell to 39.9, the lowest level since the depths of the 2009 recession.

“Western Canadians continued to be mired in a consumer sentiment malaise with confidence noticeably lower in the Prairie provinces and B.C. than the rest of the country,” Pollster Nik Nanos of Nanos Research said.

Only 16 percent of Canadians now expect the economy to strengthen in the first six months of 2019, compared with 30.5 percent who thought so at the end of 2017.

Canadian Consumer Confidence Slumps Heading Into Election Year

The outlook varies substantially by age. The index score is highest for those 18 to 29, at 61.5, and drops with each older group, reaching 50.1 for those 60 or older. Home ownership is also a factor -- the index fell to 52.5 from 61.5 a year earlier among those who own a home, but was 60.1 among renters, down from 63.8. The Bank of Canada raised interest rates three times in 2018.

On real estate, 39.7 percent of Canadians expect prices to increase in their neighborhood in the next six months, compared with 18 percent who expect a decrease. The gap between optimists and pessimists, at 21.7 percentage points, has narrowed from 32.2 points a year earlier, showing dwindling expectations of price gains.

Personal finances worsened over the year. Just 18.8 percent of Canadians said they were better off than a year ago, while 24.9 said they were worse off; at the end of last year, those figures were essentially equal.

The share of Canadians who said their job was at least somewhat secure was 69.4 percent, down from 71.1 percent a year earlier.

The polling is based on 1,000 respondents polled over four weeks, and is considered accurate within 3.1 percentage points, 19 times out of 20.

©2018 Bloomberg L.P.