Bank of Canada move sparks increased optimism among consumers
Canadians are starting to feel a bit better about the state of the economy, according to the latest Bloomberg Nanos Canadian Consumer Confidence Index.
The index, which measures economic sentiment, climbed to 54 last week, the highest level since May 2022. This rise represents a significant gain of about three points over the past month. A reading above 50 indicates net positive sentiment.
“Canadians felt better about all these topics last week, based on the net change between positive and negative responses,” Bloomberg said in the report. “That helped lift the overall confidence index to its two-year high.”
The Bank of Canada cut its policy rate by 25 basis points to 4.75% last Wednesday. While most survey responses were collected before the rate cut, the central bank's move had been widely anticipated due to slowing economic deceleration over the past several months.
This improvement comes despite ongoing challenges in the economy. Many households are still grappling with the impacts of a per-capita recession since 2022 and consumer prices that are much higher than their pre-pandemic levels.
Despite this recent uptick in confidence, current views on the economy remain less positive compared to historical data since 2008. However, there is growing optimism about the future, particularly in the real estate sector.
Read next: RBC: Housing market in limbo as Canadians await cheaper mortgages
When asked about the economic outlook, 40.5% of respondents expect the economy to weaken over the next six months. Although this remains a pessimistic view, it is an improvement from the higher levels of negativity seen in 2022 (63.8%) and 2023 (52.9%).
Geographically, the survey indicates a mixed picture across Canada. Sentiment is notably more positive in Quebec and Atlantic Canada, while it remains weaker in British Columbia, Ontario, and the Prairie provinces.
Each week, Nanos conducts surveys with approximately 250 Canadians, gathering their views on personal finances, job security, and their perspectives on the economy and real estate prices.
Bloomberg then publishes a four-week rolling average of 1,000 randomly sampled telephone responses. The survey has a margin of error of about three percentage points, 19 times out of 20.
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