OTTAWA - Canadians are beginning to feel better about their financial prospects and that may signal that consumers are ready to re-engage in the economy, the Conference Board of Canada says.
The Ottawa think-tank's monthly survey on consumer confidence continues a recent trend of better than expected indicators that chief economist Glen Hodgson says is consistent with an economy nearing the bottom of its rapid descent.
"We're beginning to form a bottom of the recession. We're starting to get people looking a little more creatively and optimistically ahead," Hodgson said.
"They understand they can buy stuff at a much better price than they did six months ago, that they are able to re-finance their mortgage at really impressive rates and that they probably aren't all going to lose their jobs."
Encouraging signs Monday included a surge in equity markets that builds on two weeks of gains -- an implicit first-blush vote of confidence to U.S. president Barack Obama's up to US$1-trillion plan to help out the financial sector -- and new housing numbers showing a gain in sales south of the border.
The Conference Board's March survey showed Canadian consumer confidence rising 2.7 points to 71.5, although the index remains well below the 100-level that was prevalent until about last summer.
The survey also showed Canadians are feeling better about their job prospects, although job insecurity remains high.
The most statistically significant uptick came on the question of whether now is a good time to make a major purchase, with 34.7 per cent saying it was. That was up 4.6 percentage points from the previous poll in January.
In another report of leading indicators from Statistics Canada reflecting mostly previously-published data, nine of 10 components declined in January as the index fell 1.1 per cent.
Economists are of mixed views about the importance of consumer confidence surveys in predicting future behaviour, but CIBC's Avery Shenfeld said it was helpful.
Shenfeld agreed there have been a smattering of encouraging signals recently, including on housing and retail sales, but added a recovery won't occur until jobs stop disappearing in large swaths. In the past two months, Canada has lost 212,000 jobs.
"The pieces of an economy recovery, in turns of policy developments, are starting to come together, but there's still some large questions around (the Obama plan) and it will be months before we see an impact from the fiscal stimulus," he said.
Hodgson said the fact that Canadian consumer confidence has not fallen since December is a good signal for the economy, but also agrees that the economy probably won't start moving forward for another four to six months.
The March 5-13 survey is consistent with the levels of the past two recessions, said Hodgson.
Only 20.5 per cent of respondents said they expected their financial situation to improve in the next six months, a decline of 1.5 points. Asked if their situation had improved over the past six months, most reported it was unchanged.
There was a slight improvement on the jobs question, with the proportion expecting fewer jobs to be available six months from now falling by 3.7 percentage points. But 50.8 per cent still predicted the job situation will deteriorate. And the think-tank noted the poll was conducted before Statistics Canada revealed that 83,000 jobs vanished in February.
The Conference Board says the monthly poll of 2,000 people is accurate within 2.2 percentage points 19 times out of 20.
Regionally, the survey found consumer confidence rising most in Atlantic Canada, with Ontarians remaining the glummest.
Residents of British Columbia continued to be the most optimistic with an overall index of 82.6. Ontarians, battered by the manufacturing slump, were most pessimistic at 66.3.
