Canadians are sending mixed messages about their confidence in the economy, according to results of a quarterly poll that suggests growing numbers believe the overall economy is weakening even while most Canadians feel secure in their jobs and believe their personal financial situations will stay the same or improve over the next six months.
Nanos Research’s Expectations Index, based on consumer expectations about the economy as well as real estate values in their neighbourhoods, had a reading of 104.1 in the third quarter, its lowest point since 2009. The number of Canadians who think the economy will grow stronger in the next six months fell to 16% in the third quarter from 29.2% in the second. To reinforce that pessimism, the number predicting the economy would weaken in that period rose to 38.9% from 23.6% in the second quarter, and the number predicting no change fell to 41.8% from 42.7%.
The Expectations Index and other forecasts are based on results of a telephone survey of 1,209 Canadian adult conducted by the Ottawa-based agency between Sept. 25 and Oct. 2, hard on the heels of two months of extreme market volatility due to the European debt crisis, the U.S. debt ceiling debate and ongoing concern about the state of the recovery in the world’s largest economy. European leaders’ inability to resolve that continent’s debt crisis may lead to lower spending in Canada, Nanos Research president Nik Nanos told Bloomberg.
“One cannot underestimate the psychological impact of continuing negative news in terms of political gridlock in the U.S. and economic uncertainty in Europe,” Nanos said. “These two forces have created a chill effect among consumers in Canada and have contributed to a further erosion of Canadian consumer confidence.”
Asked for their views on real estate prices, 31.7% believed house prices would increase in the next six months, down from 35.1% in the second quarter, while 13.6% believed they would fall, up from 10.4%. The number who see no change was flat at 51.4%.
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