New consumer confidence figures show housing pessimists and optimists furthest apart since 2014

Canadian household sentiment surged last week to its highest in almost two years as worries about the economy and personal finances waned, the weekly Bloomberg Nanos Canadian Confidence Index showed.

The index rose to 59.5 in the week ended July 29, the highest since October 2014, from 57.5 previously. The one-week gain was the biggest since June 2013. Sentiment improved in every region of the country and on all the major questions about job security, real estate, personal finances and the economy’s future.

Confidence has come up sharply since the beginning of the year when slumping commodity prices and a weaker Canadian dollar acted as a drag on household sentiment. New government child payments last month and financial-market gains also may be fueling a sense of well being among Canadians.

While the child benefits are part of the explanation, the size of the weekly change is more consistent with an exogenous news event, said Nanos Research Group Chairman Nik Nanos. One explanation is that Canadians feel more confident about their own situation the more they look at the U.S. presidential race, he said.

“There is probably a combination of factors at play, including the checks from the federal government,” Nanos said in a phone interview from Ottawa. “The uncertainty in the U.S. likely makes Canadians feel a little more stable and secure on the economic front.”

Key Points

*The data show a sharp decline among pessimists. The share of Canadians anticipating falling real estate prices and a weakening economy fell to the lowest since November. Those worried about job security and deteriorating finances is at the lowest since early 2015.

*Optimism increased in every region in Canada, led by Ontario, where the confidence reading of 62.6 was the highest since September 2014. Even the Prairie region, where Alberta is struggling with an oil crash, climbed to 53.9 from 51.9.

*Housing recorded the widest spread between optimists and pessimists since October 2014, while on the economy optimists outnumber pessimists by the most since November.

*The gap between those who say their personal finances are better off, at 16.3 percent, versus those who feel worse off, or 21.5%, is 5.2 percentage points, the narrowest since June 2015.

The Bloomberg Nanos Canadian Confidence Index is based on telephone polling with a rolling four-week average of 1,000 respondents. It is considered statistically accurate within 3.1 percentage points, 19 times out of 20, with larger margins of error for regional breakdowns.

Kevin Ikeda Chen

Kevin Ikeda Chen

CENTURY 21 Heritage House Ltd., Brokerage*
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