The biggest drop in optimism about Canada’s economic prospects in 15 months pulled down consumer confidence for the first time in nine weeks.
The Bloomberg Nanos Consumer Confidence Index fell to 57.7 from 58.6, which was the highest in more than a year. The proportion of those saying the economy will be stronger in six months fell to 26 percent from 29.2. The drop in optimism of more than 3 percentage points is the most since August 2014.
The world’s 11th largest economy showed signs of weakness over the last week including a Canadian dollar falling below 75 U.S. cents and crude oil at $40 a barrel.
Optimism that had coincided with the election of Prime Minister Justin Trudeau’s Liberal Party on Oct. 19 also took a hit, as Finance Minister Bill Morneau said weakness from the oil slump will put the country into a C$3 billion ($2.2 billion) deficit this fiscal year rather than the previous government’s projection of a surplus.
Home owners are also showing less optimism. The proportion of people expecting higher local home prices in six months was the lowest since late September at 34 percent. The expectations of home owners were the weakest on record compared with those who rent, the survey showed, with readings of 54.2 for those who own a home and 61.4 for renters.
“Consumers might now be reacting to the prospect of a correction in the housing market,” said Robert Lawrie of Bloomberg Economics.
The Organization for Economic Cooperation and Development earlier this month called for regulations to curb the risk of a slump in the housing market in cities such as Vancouver, where prices have jumped 19 percent over the past year.
Every week, Nanos Research generates a confidence index from survey questions on personal finances, job security, the outlook for the economy and real estate prices. The survey, based on phone interviews with 1,000 people, uses a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points, 19 times out of 20.