Second Wave of Coronavirus Wallops Canadian Consumer Confidence

Canadian consumer confidence recorded its largest one-week decline in five months as the nation gets hit by a second wave of Covid-19 cases.

The Bloomberg Nanos Canadian Confidence Index, a composite measure of financial health and economic expectations derived from telephone polling, dropped more than half a point to 52.4 for the week ended Oct. 9. Thats the biggest weekly decline since April, bringing the gauge to the lowest since mid-August.

The sharp decline in sentiment coincides with new lockdowns on activity in the country‘s two largest provinces, Ontario and Quebec, which are experiencing a sharp rebound in cases. On Friday, Ontario’s government announced closures of businesses and restrictions on family gatherings, in three regions, including Toronto. That comes after similar restrictions in Quebec in recent weeks.

Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security and their outlook for the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 responses.

The slide in confidence last week was the first major move for the index since mid-August, when Canadian household sentiment began to plateau after recouping more than four-fifths of pandemic-related losses.

The drop reflects declining sentiment around the broader economic outlook, despite relatively robust indicators in recent weeks including a surprise jobs gain in September. The share of households that expect the economy will strengthen over the next six months dropped to 16%, its eighth weekly decline since hitting a post-pandemic high of 25% in mid August.

Canadians, however, remain bullish on housing. About 44% of respondents expect the value of real estate in their neighborhood will go up over the next six months. Thats unchanged from last week, with the reading for that question hovering at historically elevated levels.

Regionally, Quebeckers posted the sharpest declines in sentiment.