Despite high unemployment and the mess our neighbours to the south have made of their post-COVID-19 reopening, Canadian consumer confidence has rebounded to approximately two-thirds of its pre-pandemic level according to new data from the Conference Board of Canada.
While the Board’s new Index of Consumer Confidence includes a healthy dose of regional variation, the headline number – a 25 percent increase in consumer confidence from May 1 to June 1 – shows a country looking to the future with considerably more hope than it had in April, when consumer confidence was 40 percent lower than it is today.
Currently sitting at 80 (the baseline of 100 was established in 2014), the Index is a far cry from where it stood in February, when it reached 121. Canadians clearly don’t feel as if they’re out of the woods yet. But with every province posting at least a nine-point month-over-month improvement, it feels safe to say that the country is closer to returning to its normal spending habits.
The Conference Board polled Canadians between June 5 and 14, asking them four questions. The first two, related to personal finances, showed lingering anxiety among those surveyed. When asked if their finances are better or worse than they were six months ago, 11.3 percent said they were better, while 30.8 percent said they were worse. Those numbers were little changed from May, when they came in at 11.15 percent and 32.91 percent, respectively.
Things started looking sunnier when Canadians were asked about where they expect their finances to be in six months. Just under 17 percent said they expect their finances to be better, up from 15.5 percent in May. The number of respondents who said they expect their finances to worsen fell to 18.2 percent, down from May’s 23.2 percent and much lower than the 36 percent seen in April.
Attitudes around employment are improving as well. When asked whether they expect more or fewer jobs in their areas in the next six months, 18.7 percent of Canadians said they expect more, with 43.5 percent expecting fewer. Those numbers are markedly improved from May, when 14.6 percent expected an improvement in the employment environment and over 52 percent expected further deterioration.
Now for the potentially good news for mortgage pros: when asked if now is a good or bad time to make a major purchase, 20.4 percent said now is a good time, versus 57.5 who said it is not. In May, fewer than 15 percent said it was a good time to make a major purchase, while an ugly 69 percent said it was a bad time.
Sentiment can be a powerful thing – just look at the stock market – but consumer confidence is awfully subjective. Anthony Venuto of InTouch Mortgage Solutions says each person’s confidence is dictated by a number of factors, from what headlines they read to whether or not they have parents willing and able to assist them with a major purchase.
“I always have a concern with who they’re polling,” he says. “Are they people who have been approved, people who haven’t been approved, people who are thinking of buying?”
In an ironic twist, Venuto says some of his clients who have been approved for higher amounts are actually choosing to spend less.
“They’re saying, ‘Instead of stretching myself to over a million, maybe I’ll scale back a little bit just to keep my payments a little more manageable – just in case something like [the COVID-19 shutdown of the economy] happens again,” he says.
Circa July 2020, that combination of buying power and scepticism is likely as accurate a summation of the prospective Canadian homebuyer as any available.