Canadians: it’s a bad time to buy furniture

OTTAWA (01 February 2016) – Just over 50% of Canadian consumers told the Conference Board of Canada last month that now is not a good time to make a major purchase – a high not seen in recent years. What’s more, its overall Index of Consumer Confidence fell in January to its lowest level since 2011.

The board reports the index fell 10.9 January to 80.1. The index was set to 100 in 2014.

"The plunge in oil prices has been a key contributor to the weakening of consumer confidence over the last few months," Julie Adès, a senior economist with the board’s national forecasting service, said in her report. "Unsurprisingly, the weakness in commodity prices has had the biggest impact on consumer confidence in Alberta and Saskatchewan-Manitoba. However, consumer sentiment has also shown signs of weakening in other parts of the country in recent months. And in January, the increase in pessimism was spread across all regions."

The regional indicesFor example, Quebec’s index fell for the second consecutive month in January. Meanwhile, Ontario’s fell 12 points, continuing a downward trend that began in April 2015 after two solid years of improvement. "Deteriorating sentiments were particularly evident on the current and future finances questions and on whether it is a good time to make a major purchase," Adès said, adding the balance of opinion deteriorated on all four questions for the second time in as many months.

British Columbia’s index also dropped for the second consecutive month. "Here, too, the index followed an upward trend in 2013 and 2014," she noted. "However, that came to an end in early 2015. And the last two months of declines have now brought the index back to where it was in early 2014."

"As oil prices have weakened, so has Albertans’ confidence in their economy," Adès continued, pointing out Alberta’s index reached a new low in January – continuing a long drop that started in October 2014. "Alberta’s index now stands close to 66 points below its 2014 average."

Weak commodity prices are also affecting consumer confidence in the Saskatchewan-Manitoba region, where the regional index fell for the third consecutive month in January. "With the local economies being battered by depressed commodity prices, the index has been on a downward trend since the end of 2014," Adès said.

Atlantic Canada’s index also fell for the second consecutive month in January. However, unlike the others, it remains above its 2014 average.

The four questionsAdès pointed out that from 2012 to early 2015, Canadian consumer sentiments about their current financial situation improved steadily.

"But that situation is clearly over," she said, reporting sentiments on this question deteriorated for the second consecutive month in January. Those saying they are better off now than they were six months ago fell from 14.8% to 13.8%. Meanwhile, those saying they are worse off increased from 25.5% to 28.2% — with the deterioration concentrated in Ontario, Quebec and B.C.

Consumer attitudes toward future finances also took a hit in January with the number saying they expect to be better off six months from now remaining unchanged at 20.1%. However, those expecting to be worse off increased from 18.7% to 22.1%.

Also deteriorating for the second consecutive month was consumer attitudes about job creation. The share of respondents saying their expect to see more jobs in their communities in the coming months fell from 9.1% to 8.0%; while those expecting fewer jobs increased from 34.5% to 35.8%. "The deterioration was felt almost everywhere," Adès said.

Consumers saying now is a good time to make a major purchase – such as a car, house or other big ticket item such as furniture or major appliances – dropped from 29.4% in December to 24.3% in January, with those saying it’s a bad time increased from 44.3% to 50.3%. "That means that more than half of Canadians believe this is not the time to make a major purchase," Adès said. "The increase in pessimism was felt everywhere except Alberta, where the balance of opinion was already highly negative in December."

The Conference Board of Canada conducted its online survey of over 3,000 Canadians between January 4 and 14, 2016.