As virus skyrocketed, consumer confidence plummeted
As COVID-19 cases skyrocketed across much of the country, Canadian consumer confidence first plunged in April after six months of a steady upward trajectory.
In the space of a few weeks, the national outlook for the general state of the economy and personal finances fell significantly by 6.8 points, according to figures from the country’s leading economic think-tank. This means that Canadians plan to cut spending and participate less to facilitate a crucial financial recovery, stemming from growing pessimism about their ability to find and keep good jobs.
The new figures from the Conference Board of Canada come just a month after the group indicated the strongest growth in financial optimism at levels not seen since the outbreak of the coronavirus. Consumer confidence rose more than 14 points in March, 87% of its pre-pandemic levels.
“Growing concerns about the future – along with tighter restrictions – have eroded Canadians’ confidence in major purchases,” said Anna Feng, economist in the Conference Board’s forecasting group.
“This anxiety is likely to weigh on discretionary household spending in the short term,” Feng said, citing the 54% of survey respondents who believe now is not the time to buy an expensive item.
With the exception of the Atlantic region, where consumer confidence actually rose 16.9 points, April’s index fell across the country. Residents of the region are more optimistic about their future finances and employment prospects, the council noted.
In the Manitoba-Saskatchewan region, a drop of 5.3 points was observed this month, falling to 79% of its pre-pandemic level. “The weakness in consumer confidence stems mainly from concerns about future finances. Consumers in the region are less confident about the issue of large purchases as the uncertainty increases, ”Feng said.
Among other areas, Ontario was particularly pessimistic about future employment prospects, recording the highest share of negative opinions in the country on an implementation of new home support orders. This translated into a 5.6% drop for the populated province of Canada in April.
The Quebec index fell 2.5 points, following three consecutive months of increases. Consumer confidence in Quebec now ranks at the bottom of the recovery table compared to other regions, at only 75% of its pre-pandemic level.
British Columbia’s index plunged 18.1 points in April, from 98% of its pre-COVID level last month to just 85%. People there are increasingly concerned about their future employment prospects, as the province recorded its biggest dive in positive feelings over the issue of future employment since March 2020.
BMO economist Priscilla Thiagamoorthy says it’s no surprise that consumer confidence is dwindling, especially as Canadians are watching their neighbors south of the border.
“Households here have become more pessimistic as the nation faces a third wave,” she wrote in a note to Bank of Montreal clients this week. “Americans are increasingly optimistic about the economic recovery, as the vaccine rollout continues to gain momentum and openings resume.”
But despite the drop in Canadian consumer confidence in April, Thiagamoorthy said there was “light at the end of the tunnel.” It forecasts strong economic growth in the second half of 2021
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