A rising currency and a red-hot labour market has sent Canadian consumer confidence to the highest in three years.
The Bloomberg Nanos Canadian Confidence Index climbed to 60.5 in the week ending Aug. 4, the highest since July 2014 and close to a record.
The improving sentiment suggests Canadians are shrugging off the impact of higher borrowing costs after the Bank of Canada raised interest rates last month, focusing instead on an accelerating economy that has driven the jobless rate to the lowest since 2008 and the purchasing power benefits that come with a higher dollar. That bodes well for a continuation of the household spending that has been fueling the nation’s expansion.
“While the normalization of interest rates is likely to have a negative impact on household balance sheets, a stronger Canadian dollar could be perceived as another sign of a healthier economy,” New York-based Bloomberg economist Robert Lawrie said.
The polling also showed sentiment gains were broad-based, and have completely offset housing-sector worries. The share of people who believe the economy will strengthen is the highest in seven years at 32.3 percent, according to the polling. The figure climbed from 28.1 percent in the prior edition and from 22.1 percent a month ago.
The polling figures showed only 8.7 percent of people are insecure about their jobs, which the lowest on record. Canadians also feel better about personal finances, with 20.2 percent saying their balance sheets are stronger than a year ago. That’s the highest reading for this measure since September 2016.
Housing was the only weak point in the data. Sentiment about home prices dropped to the lowest since January.
Confidence also climbed across different regions. Quebec’s index hit a record high 61.9, a reflection of the French-speaking province’s job market, which is among the nation’s strongest.
The Prairie region including Alberta improved in line with a gain in oil prices that has kick-started a rebound in drilling and investment after a two-year crash. The confidence index for the Prairies reached the highest since March.
The Bloomberg Nanos Canadian Confidence Index is based on telephone polling with a four-week rolling average of 1,000 respondents, and is considered accurate within 3.1 percentage points, 19 times out of 20.
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