Consumer confidence ticks up in May as COVID-19 cases decline

By Anna Feng

The Index of Consumer Confidence jumped 6.5 points higher in May to 104.9 (2014=100), almost offsetting the 6.8-point decline seen in April. The index now sits at 87 per cent of its pre-pandemic level.

With the speedy rollout of vaccines, many Canadians are growing more hopeful for an economic reopening and are feeling more confident about their future job prospects. Over 26 per cent of survey respondents believe there will be more jobs six months from now, the highest level of optimism since 2002.

However, consumers remain cautious about making major purchases. The optimism on the question retreated for the second consecutive month. Close to 57 per cent of survey respondents believe that now is a bad time to make a major purchase, the most pessimistic level since last June and exceeding the peak seen during the 2008 financial crisis.

This result is likely related to the pandemic’s third wave across many parts of the country but also to the extraordinary home price increases across Canada that are affecting affordability. The setback in confidence on purchasing big ticket items threatens the near-term outlook for household spending.

Ontario: As COVID-19 cases start to fall back from a peak reached in mid-April, Ontarians are slightly more confident about their future. Ontario’s index rose 4.3 points in May, thanks to positive sentiment about future employment. Over 25 per cent of survey respondents believe that there will be more jobs six months from now, more than double the number of positive views observed before the pandemic. However, concerns over financial conditions, both current and future, are weighing on consumers’ confidence in making major purchases. Positive sentiment on the question of major purchases held relatively steady at 17.9 per cent in May, roughly in line with the national average.

Quebec: Quebec’s index rebounded by 6.3 points in May, recovering to around 79 per cent of its pre-pandemic level, the slowest pace of recovery after the Atlantic region. With the gradual easing of restrictions in some regions of the province, Quebecers are significantly more confident about their future. Optimism improved on questions of future employment and finances. However, Quebecers are particularly cautious about making a major purchase now, due mainly to their concerns over their current finances. With roughly 67 per cent of negative views on the question, Quebec logged the highest share of pessimism across Canada in May.

Alberta: Alberta’s index bounced back 9.0 points in May, bringing the index above its pre-pandemic level by 5 per cent. The recent uptick in oil prices boosted Albertans’ confidence about their financial conditions, both current and future. Nevertheless, the controversial order by Michigan Governor Gretchen Whitmer to shut down Enbridge Line 5 operations by May 12th dimmed the employment outlook for many Albertans. The pessimism on the question of future employment intensified for the second consecutive month. More than 37 per cent of survey respondents held negative views about their future job prospects, the highest share of pessimism across Canada. Given the pessimism about job conditions, it’s not surprising that Alberta had the lowest share of positive views (14.8 per cent) on the question of major purchases in May.

British Columbia: The index in British Columbia shot up 19.6 points in May, reaching 98.6 per cent of its pre-pandemic level. Consumers’ optimism about their finances and future employment improved significantly. Close to one-third of survey respondents are optimistic about their job prospects six months from now, which is the highest share of positive views among provinces. Positive sentiment on major purchases, however, stalled at 16.7 per cent, likely because of concerns over recent tougher restrictions implemented in the province.

Prairies: The index in the Saskatchewan-Manitoba region stayed flat at 74.3 in May, following its decline of 5.3 points in the previous month. Manitoba has the highest Covid-19 per capita infection rate in Canada. As such, consumers in the region are particularly worried about their future employment. The Saskatchewan-Manitoba region is the only area that logged negative views on the question of future job prospects. Only 13.8 per cent of survey respondents in the region believe that there will be more jobs six months from now, the lowest level among provinces. The pessimistic views on the question of major purchases also significantly rose in May, as more than 53 per cent of survey respondents believe that now is a bad time to spend money on big-ticket items. 

Atlantic Canada: As COVID-19 cases spike in most of the Atlantic region, especially in Nova Scotia, tighter restrictions and the delayed reopening of the Atlantic Bubble are taking a toll on consumer confidence in the region. The index plunged 19.5 points in May, back to the bottom of the recovery chart among provinces. Pessimism intensified on all four survey questions. The region now has the lowest confidence on questions related to finances. As such, only 15.9 per cent of survey respondents believe now is a good time to make a major purchase, the lowest share of optimism following Alberta.

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