Consumer confidence down, Canadians not saving: RBC survey
Posted Oct 26, 2011 12:46:54 PM.
This article is more than 5 years old.
TORONTO, Ont. – The latest survey by the Royal Bank of Canada shows consumer confidence has dropped from earlier this year, mainly due to economic worries about Europe.
The October Canadian Consumer Outlook Index stands at 70 points, down 24 points from last quarter, marking its lowest level in two and a half years.
“We saw a huge run up earlier in the year in terms of oil prices and commodity prices more generally, and that acts as a tax hike for consumers,” said RBC’s Senior VP and Chief Economist Craig Wright. “We also saw the weakness in confidence – [the] lack of confidence [in the] financial markets and that spilled over as well.”
However, Wright pointed out that despite the doom and gloom over the past few months, economic data has started to improve.
“The data actually looks a little bit better, so as long as the data continues to hold up, then we should see these confidence numbers bounce higher as we move to the end of the year and into next year,” he told 680News.
The survey also showed that 57 per cent of the Canadians asked have no savings set aside for a rainy day. Of those who do, approximately 30 per cent dip into them to help pay for everyday expenses or an emergency.
But concern about Canadians losing their jobs has not changed from the previous quarter, remaining at 22 per cent.
“One of the components of this index is that the job anxiety index actually held firm and that’s consistent with the strengths we’re still seeing in the Canadian labour market,” Wright said.
The survey also suggested that Canadians are “very focused” on finding ways to manage their finances. Over the next 12 months, 33 per cent said they plan to reduce their debt, 30 per cent intend to spend less, 21 per cent expect to save or invest more and 21 per cent plan to do all of the above.
Economists — including Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney — have been warning for months that Canadians have been racking up more debt than they can sustain, as a long period of ultra-low interest rates and sluggish price inflation have combined to create easy borrowing conditions.
And the central bank hinted Tuesday that it will need to keep interest rates super low for an extended period to stimulate an economy being battered by a sharp global downturn and rising risks. As expected, the target overnight rate was left at one per cent.
In an pessimistic new forecast of future expectations for economic growth, it gave every indication that Canadians can bank on lending conditions staying “stimulative” well into the future.
The RBC CCO survey was conducted online by Ipsos Reid and involved data collected between Sept. 26 and Oct. 3 from 3,054 Canadians across the country. Pollsters consider it accurate within plus or minus 1.65 percentage points 19 times out of 20.
