Consumer confidence started 2011 on a positive note but with Canadians continuing to sound notes of caution about their personal financial situations, according to the Conference Board of Canada.
The Ottawa-based economic forecaster reported consumer confidence was up 7.1 points from December, based on a survey conducted this month. It attributed the increase mainly to improvements in Ontario and the Prairie region.
As of January, the overall index stood at 88.1 points–far higher than it was two years ago during the recession but below the optimism expressed in early 2010.
One of the clearest signals of improved consumer confidence was that 28.1% of respondents said they expect their financial situation to improve in the coming six months, up 3.3 points. The number who felt the next six months looked worse, dropped by 0.7 points to 15.1%.
The respondents were also more confident about Canadian labour markets, the Conference Board said.
“When asked if they felt there would be more job opportunities in their communities six months from now, 21.3% answered yes–an increase of 1.4 percentage points. And more importantly, the share of respondents who expect fewer jobs in their communities in six months fell 2.7 percentage points to 15.8%,” the report said.
“These are encouraging results for the outlook going forward, as responses on this question trended lower over the second half of last year despite the solid pace of job creation that has accompanied Canada’s economic recovery.”
There was also a clear signal that more respondents felt good about making a major purchase, although the optimistic camp and pessimistic group each represented about 44% of respondents.
“Respondents are asked if now is a good time to make a major purchase, such as a car, house, or major appliance. This month, the share of respondents who answered ‘yes’ to the question rose 5.5% to 44%,” the Conference Board said.
“At the same time, those who answered negatively saw their share decline to 44.2%, a drop of 5.3%.”
“Whether this sudden improvement on the major purchases question can be sustained remains to be seen. But, coupled with the increasing optimism about future employment opportunities, it does suggest healthy consumer consumption going forward.”
On the survey’s question about Canadians’ perceptions of their personal financial situation over the past six months, the improved sentiment was due to fewer pessimistic responses rather than increased optimism.
The percentage of respondents who said their financial situation had worsened over that period fell by 1.8% while the percentage who felt things were better also fell, but by only 0.2%.
