Quick take

Consumer confidence retreats for the second consecutive month

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  • After dropping 7.7 points in August, the Index of Consumer Confidence fell by 3.5 points in September to 110.0 (2014 = 100), its first two consecutive months of decline since March 2020.
  • With the fourth wave sweeping across Canada, several provinces postponed further re-openings and implemented new restrictions. Although these restrictions are not as stringent as those in previous waves, Canadians’ concerns about the future still intensified, especially in Ontario, Quebec, and British Columbia.
  • Canadians’ confidence in their future finances retreated again this month. The share of negative views on the question of future finances registered its largest monthly gain since April 2020. Many households felt their purchasing power weaken due to sky-high prices.
  • Confidence in future employment continued to trend downwards from its all-time high (36.2 per cent) in June 2021, but at 25.6 per cent it still surpasses any pre-pandemic high. This suggests that Canadians are still optimistic about more job opportunities six months from now.
  • Only 18.9 per cent of survey respondents believed that now is a good time to purchase large ticket items, falling below 20 per cent for the first time since June. Sentiments on major spending still have a long road to recovery compared to the average sentiment of 31 per cent in 2019.

Key insights:

  • The decline in September’s Consumer Confidence Index reflects Canadians’ caution in the face of the fourth wave. Concerns over future finances and employment mean that the average Canadian will likely hold back on spending and save more for a rainy day.
  • As COVID-19 cases continue to rise, consumer confidence is likely to trend downwards in the near term. Stretched health care capacity and rising hospitalization rates may force other provinces to join Alberta in implementing stricter restrictions. Any further tightening in restrictions will further weaken consumer confidence and delay the economic recovery.

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Anna Feng

AnnaFeng

Economist

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