Search

Index of Consumer Confidence for April 2025: Confidence Upswing In Spite of Continued Trade Headwinds

Canadian Economics

By: Loubna Zebiri

The Index of Consumer Confidence rose 4.2 points to 48.4 (2014=100) in April.
The survey dates are from April 11th to April 20th.

  • After falling to a record low in March, the Index of Consumer Confidence showed a modest improvement this month, primarily driven by more neutralized sentiment regarding future job market prospects and financial conditions.
  • Consumers appear to hold a cautiously optimistic outlook regarding future conditions. This might suggest that households expect current economic pressures may ease over time. Yet, this optimism stands in contrast to continued pessimism about present financial circumstances.
  • Indeed, when asked about their current financial situation there was widespread decline in respondent’s present confidence. This follows the ongoing trend that has persisted over the past several months, driven by a series of evolving economic challenges both at home and abroad.
  • However, when respondents were asked about future finances, the share of consumers perceiving a deterioration in their future financial situation compared to six months ago decreased 4.2 percentage points to 29.7 per cent, marking the first significant drop since April 2022. Simultaneously, the proportion of consumers foreseeing an improving future financial outlook rose by a cautious 1.5 percentage points, to 15.0 per cent.
  • When asked about their future job prospects, respondents expressed similar sentiment to that regarding the future financial situation.
  • The share anticipating fewer job opportunities six months from now fell 7.6 percentage points to 42.0 per cent, following the historic high recorded in last month’s survey.
  • At the same time, the share expecting more job opportunities six months from now remained largely stable, edging up just 1.3 percentage points to 5.6 per cent.
  • Evolving domestic economic indicators are likely contributing to a more positive outlook among consumers regarding their future financial situation. The stabilization of inflation alongside interest rates settling into neutral territory appears to be helping.
  • The U.S. decision to suspend new tariffs on most trading partners, while maintaining those already imposed on Canadian goods and focusing pressure on China, offered only limited clarity but eased broader trade tensions. This partial de-escalation may help explain why Canadian consumers are somewhat more optimistic about the future, even as current sentiment remains weighed down by persistent trade frictions and economic uncertainty.
  • Overall, the level of consumer confidence remains 22.9 percentage points below its peak six months ago.

Insights

Trade turmoil marks the first cracks in labour market stability. In March, the Canadian economy shed approximately 33,000 jobs, the first monthly decline since July. The strong employment gains observed earlier this year are now at risk of unwinding entirely should uncertainty surrounding tariffs and broader trade policy persist.

Hiring momentum mirrors the drop in employment. Our hiring index for the month of March showed a weaker trend, with a noticeable drop in job postings within the services sector. This suggests a cautious stance on workforce expansion, as businesses scale back hiring amid ongoing economic uncertainty.

Despite the recent dip in hiring and employment, consumers still expect future labour market stability. While industries vulnerable to tariffs and global trade disruptions are facing more immediate challenges, consumer sentiment for the future seems to be more positive, at least for the moment.

Bank of Canada halts easing cycle amid rising uncertainties. Although inflation remains relatively stable, the Bank of Canada held its policy rate steady in its latest announcement. The pause reflects growing concerns over external trade tensions and signs of domestic economic weakness, marking a shift from inflation control to broader economic vulnerabilities.

Lead shoes for a limping economy. Canada’s economy is encountering significant headwinds due to trade tensions with both the United States and China, Canada’s major trading partners. With the U.S. implementing tariffs on a number of Canadian goods including automobiles, aluminum and steel, and China imposing tariffs on Canadian agricultural and seafood exports, the country’s economic growth prospects may be stymied.

The Canadian economy will take a hit in the coming months. In light of recent developments, we have revised our national GDP forecast to reflect the impact of escalating U.S. and Chinese tariffs, Canada’s retaliatory measures, and the appreciation of the Canadian dollar. Our call is for a 0.8 per cent slowdown in real GDP for the second quarter of 2025. The anticipated decline in Canadian exports is expected to weigh on business investment, with downstream effects on the labour market. As a result, we estimate a net employment loss of 73,400 jobs (seasonally adjusted at annual rates) over the same period.

For more insights into Canada’s trade relationship with China, please consult this article.

Related Insights

See More Insights

Comments