Consumer Confidence Falls to Its Second-Lowest Recorded Score

Canadian Economics

The Index of Consumer Confidence fell 6.7 points to 51.5 points in November, marking four consecutive monthly declines.

  • Canada’s index saw a decrease in optimism regarding current finances. The percentage of individuals who think their finances have improved from six months ago fell from 10.2 per cent in October to 9.6 per cent in November. Similarly, those who believe their financial situation remained the same since then also decreased slightly from 49.5 per cent to 49.0 per cent while the proportion who feel their financial situation has worsened was unchanged at 38.2 per cent.
  • Expectations for future finances saw no improvement. The proportion of individuals who believed their future finances would be better decreased 0.3 percentage points to 13.5 per cent. Conversely, the share expecting their financial situation to worsen grew from 28.6 per cent to 28.9 per cent.
  • The sentiment about future job availability has shifted down, with those expecting more jobs decreasing by 2.3 percentage points to 8.5 per cent. Those who foresee the number of jobs remaining the same also decreased to 48.7 per cent from 52.8 per cent. On the other hand, the percentage of individuals anticipating fewer jobs increased 4.9 percentage points to 29.3 per cent.
  • Enthusiasm for major purchases has dropped to its lowest point since we began tracking consumer sentiment in 2002. The proportion seeing now as a good time for major purchases dropped by 0.8 percentage points to 8 per cent while the percentage who believe it’s a bad time rose 1.3 percentage points to 71.9 per cent.

Key insights

Quebec’s November Index of Consumer Confidence experienced a 20.1-point decline, primarily driven by poorer future job prospects. This prospective decline is supported by October’s Labour Force Characteristics (released November 3rd), which revealed a substantial reduction in the province’s workforce. Full-time employment saw a sharp decline of approximately 34,500 jobs, while part-time employment increased only modestly by around 12,500 jobs, resulting in a net employment reduction of approximately 22,100 jobs and a subsequent 0.5 percentage point rise in the unemployment rate. This employment downturn was particularly pronounced in manufacturing, and in the wholesale and retail trade sector, shedding 16,300 and 5,600 jobs, respectively. These results reflect the ongoing strain on household savings and purchasing power due to elevated interest rates and inflation. Household saving rates in Quebec have plummeted from 17.6 per cent in 2020 to 11.4 per cent in 2022. Further, the first and second quarter of 2023 show no signs of improvement with them reaching their lowest levels since 2021 at 6.8 per cent and 8.2 per cent, respectively.

Atlantic Canada saw the second largest drop in consumer confidence in November. The region’s exposure to macroeconomic factors such as interest rates and inflation are likely contributing to the decline. Atlantic Canada has some of the highest homeownership rates in Canada, increasing sensitivity to interest rate fluctuations. Compared to other parts of Canada, the region has low savings-to-income ratios, meaning households are less able to endure a prolonged bout of high inflation like we have seen over the past two years.

To learn more about the economic outlooks for cities such as Montréal please visit The Conference Board of Canada’s Major City Insights.