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As COVID-19 cases soared across much of the country, Canada鈥檚 consumer confidence plunged for the first time in April following six months of a steady upward trajectory.
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Within a matter of weeks, the national outlook for the overall state of the economy and personal finances fell significantly by 6.8 points, show figures from the country鈥檚 primary economic think tank. That means Canadians plan to curtail spending and participate less to facilitate a crucial fiscal recovery, stemming from a growing pessimism towards their ability to find and retain good jobs.
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The new numbers from the Conference Board of Canada come only one month after the group indicated the highest growth of financial optimism to levels unseen since the onset of the coronavirus. Consumer confidence rose by more than 14 points in March, which was 87 per cent of its pre-pandemic levels.
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鈥淩ising concerns about the future 鈥� as well as tightening restrictions 鈥� eroded Canadians鈥� confidence about making major purchases,鈥� said Anna Feng, an economist with the Conference Board鈥檚 forecasting group.
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鈥淭his anxiety will likely weigh on households鈥� discretionary spending in the near term,鈥� said Feng, citing the 54 per cent of survey respondents who believe now is a bad time to be purchasing a big-ticket item.
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With the exception of the Atlantic region, where consumer confidence actually rose by 16.9 points, April鈥檚 index dropped across the country. People in the region are more optimistic about their future finances and job prospects, the board noted.
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In the Manitoba-Saskatchewan region, a drop of 5.3 points was seen this month, falling to 79 per cent of its pre-pandemic level. 鈥淭he weakness in consumer confidence stemmed mainly from concerns over future finances. Consumers in the region are less confident on the question of major purchases, as we see uncertainty rising,鈥� said Feng.
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Among other areas, Ontario was particularly pessimistic about future job prospects, logging the country鈥檚 highest share of negative views amid an implementation of new stay-at-home orders. That translated to a 5.6 per cent dip for Canada鈥檚 populous province in April.
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Quebec鈥檚 index fell 2.5 points, coming on the heels of three consecutive months of increases. Consumer confidence in Quebec now ranks at the bottom of the recovery chart compared with other regions, at only 75 per cent of its pre-pandemic level.
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The index in British Columbia plunged 18.1 points in April, falling from 98 per cent of its pre-COVID level last month to only 85 per cent. People there are increasingly concerned about their future job prospects, as the province logged its largest dive in positive sentiments on the question of future employment since March of 2020.
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BMO economist Priscilla Thiagamoorthy believes it鈥檚 not surprising consumer confidence is wearing down, especially as Canadians watch their neighbours south of the border.
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鈥淗ouseholds here turned more pessimistic as the nation contends with a third wave,鈥� she wrote in a note to Bank of Montreal clients this week. 鈥淎mericans are increasingly upbeat about the economic recovery, as the vaccine rollout continues to gain momentum and openings resume.鈥澨�
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But despite April鈥檚 drop in Canadian consumer sentiment, Thiagamoorthy said there is 鈥渓ight at the end of the tunnel.鈥� She forecasts strong economic growth in the second half of 2021听
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