Canada’s quick initial rebound in consumer confidence is showing signs of slowing, the most recent indicator to suggest there’s a long road ahead for a full economic recovery from the pandemic. The Bloomberg Nanos Canadian Confidence Index, a composite measure of financial health and economic expectations, was little changed at 52.7 for the week of August 24, from 52.8 a week earlier. This is the first stall in the index since early July, though it remains above 50, meaning views on the economic backdrop are net positive.
The index has been trending higher in recent weeks with most provinces lifting even more restrictions on the economy. The housing market has also heated up over the summer, helping to drive gains in the broader index. However, other recent indicators like the pace of job openings suggest the rest of the economic recovery is likely to take a long time while restrictions remain on businesses and social gatherings.
June and July showed a strong rebound after GDP plunged by an annualized 38.7% in the second quarter, the most ever. Still, Canada’s economy isn’t expected to fully make up the losses until 2022.
Bloomberg Nanos Canadian Confidence Index Highlights
Sentiment improved in three of the four subcomponents: personal finances, job security and real estate. The outlook on the domestic economy became slightly more pessimistic, with 47.4% of respondents saying it would be weaker in the next 6 months, and 23% saying it would be stronger. Ontario, Quebec and the Atlantic provinces posted increases in sentiment while decreases were observed in British Columbia and on the Prairies.
Canadians continue to become more bullish on the housing market, with 40% of respondents expecting the value of real estate in their neighbourhood to increase in the next six months. That’s the highest percentage since mid-March before the pandemic shut down the economy.
Pew Research Center Survey
Confidence in the Canadian economy took a dramatic dive over the summer in the midst of the COVID-19 pandemic — a whipsaw pivot seen around the world but sharper in Canada than any other country surveyed in a new global public opinion poll. 61% of Canadians who took part in the Pew Research Center survey released on September 3 described the country’s current economic situation as bad, more than twice the 27% who said the same thing last year.
“The economy had turned bleak in most of the countries we surveyed around the world, and in most places, people expect that the worst is yet to come,” said Shannon Schumacher, a Pew research associate and the report’s lead author. “There is also this relationship between how you think your country has handled coronavirus and how you think the economy is doing.”
The Canadian segment of the survey, conducted by phone with 1,037 adult respondents between June 15 and July 27, carries a margin of error of 3.7 percentage points, 19 times out of 20. The spike in negative sentiment may say more about the outlook Canadians had on the economy in 2019 than they currently do, Schumacher noted.
“Canada is where we saw the largest uptick in negative assessments of the economy … but it’s 27 per cent who said that they thought the current economic situation was bad in Canada in 2019,” she said. “That’s among the lowest of the countries we surveyed — only in Germany, the Netherlands and Sweden was that percentage lower last year.”
Of those surveyed in the U.S., 69 per cent said they believe the economy is doing poorly, compared with 30 per cent who disagreed — a finding roughly in line with the 14-country median results of 68 per cent and 31 per cent.
The report documents an unsurprisingly dismal outlook for the world’s economic prospects, with Canada and the U.S. as notable outliers. Of Canadian respondents, 48% said they expect the economy to improve over the next 12 months, compared with 34% who expect the opposite and 17% predicting no change. In the U.S., the optimism is even stronger: 52% said they see a brighter future ahead, compared with 32% who do not. Only Spain, Germany and Australia reported similar levels of optimism.
Almost across the board, those who disapproved of how their country has handled the outbreak were more likely to describe the economy as poor. In Canada, 85% of those disappointed in the government’s handling of COVID-19 had a negative view of the economy, compared with 58% of those who gave the feds a passing grade on the pandemic. In the U.S., 87% of those disappointed in the Trump administration’s handling of the outbreak described the economy as bad, compared with 50% of those who said the government has done a good job.
Canada also stood out in the study for another reason: it was one of only two countries where researchers saw a correlation between income levels and a negative view of the economy.“Only in Canada and Australia were people with lower household incomes more likely than those with higher incomes to say the economic situation is bad,” Schumacher said.