Consumer Confidence Slide

Reflecting rising fuel and food prices, national consumer confidence posted its third consecutive monthly decline in May 2008, dropping to its lowest level in more than a decade.
Confidence fell in every region in May, with the largest decline in Ontario. In line with the national trend, the index of consumer confidence in Ontario also reached its lowest level in more than a decade.
Consumer sentiment reached its lowest level in almost five years in British Columbia, while in the Prairie region it slid below any other point in more than seven years. In Quebec, sentiment stood about on par with levels recorded at the end of 2005. Consumer sentiment remained strongest in the Atlantic region, but still dipped to its lowest point since last April.
The balance of sentiment about making major purchases, which is an important factor underlying Canada’s housing market, turned negative for the first time in a decade in May 2008. This means that more Canadian households said it was a bad time to buy a big-ticket item, such as a home or car, than said it was a good time. A negative balance of opinion about making major outlays was observed in every region except the Maritimes.
The national balance of sentiment about job growth remained negative for the second straight month in May, and marked the least positive outlook for employment in five years. A negative balance of sentiment results when more households expect there to be fewer jobs in six months time compared to those that expect more jobs. This was mostly the result of concerns for the future of manufacturing positions in Ontario and Quebec. By contrast, the employment outlook remains strong in British Columbia, the Prairies and the Atlantic region.
With higher gas and food prices taking a bigger bite out of Canadian incomes, more survey respondents said their household budget had worsened in the past six months. More also said they expect their household finances to worsen over the next six months. But unlike the balance of sentiment about making major purchases and job growth, the balance of opinion about household budgetary outlooks remains positive, both nationally and in every region except the Atlantic provinces – where opinion turned slightly negative in May. (CREA 03/06/08)