- The Conference Board of Canada’s Index of Consumer Confidence retreated 5 points in November to 108.2 (2014 = 100), dropping to 10 per cent below its pre-pandemic (February 2020) level. The decrease was seen across Canada except in Ontario. The index is now at its lowest since May this year.
- Concerns over households’ future finances increased by 3.2 per cent this month. This increase is likely due to higher inflation expectations, suggesting that consumers expect things to get more expensive as we approach the new year.
- Given supply chain disruptions and inflationary pressures, only 18.7 per cent of survey respondents believed now is a good time to purchase large-ticket items. This is one of the lowest figures this year, coming only second to data from May. Besides, most respondents (51 per cent) were reluctant to make major purchases. The pessimistic views on major purchases are still significantly above the pre-pandemic average of 38 per cent.
- As job growth lost steam in October, the share of confidence in future job prospects sustained its downward trend from its all-time high (36.2 per cent) in June 2021, but at 26.4 per cent, it still exceeds any pre-pandemic high.
Key insights:
- Supply chain disruptions are turning out to be the bane of consumer confidence. The near future doesn’t look too bright as consumers’ optimism is likely to further erode. Canadians are likely to spend less and save more due to the uncertainty surrounding future prices and supply chain disruptions that have no end in sight. Worse still, this is all brewing in the backdrop of a looming pandemic entering an endemic phase.
- Higher prices, shortages of goods, and an uncertain environment combined are changing consumers’ behavior and dampening their confidence. With a foggy timeline on when inflation will cool down, getting consumer confidence back on track will take time and effort, with monetary and fiscal policy working in tandem to ease the nerves. A long road lies ahead.
Comments