While the Index of Consumer Confidence (ICC) published by the Conference Board of Canada rose 5.5 points to 73.6 in July 2023, the number of Canadians believing now is a good time to make a major purchase, such as a house, car, furniture or major appliance, continued to fall. Only 10.4% of consumers says now is a good time to buy.
Board economist Walter Bolduc noted this month’s survey results showed a noteworthy upswing from the previous month, saying “respondents demonstrated a more positive perception of their current financial situation in July.”
Some 13.2% of respondents believe their finances improved in July, although a majority (51.4%) said their finances were unchanged. Those saying their financial situation had worsened fell slightly to 32.9% of survey respondents.
In describing respondents outlook regarding future finances, Bolduc said “there was a moderation in optimism.”
He noted the percentage expecting an improvement in their finances fell, while those anticipating a decline reduced by 2.4 percentage points. “Consequently, the proportion of individuals who believed their finances would remain unchanged regained a majority, increasing from 48.4% in the previous month to 50.2%,” he said.
July’s survey revealed Canadians were slightly more optimistic concerning future job prospects as the number believing there would be more job opportunities increased by 1.4 percentage points to reach 12.6%. Likewise, the proportion of those anticipating the same number of jobs rose by 1.8 percentage points, reaching 54.6%. In contrast, the percentage of individuals expecting a decrease in job opportunities dropped to 20.3 per cent, reflecting a decline of 2.9 percentage points.
In what is sure to be seen as bad news for most furniture, furnishings and major appliance retailers, the Canadian consumer’s outlook on major purchases deteriorated further in July. While the number thinking now is a good time to buy grew slightly, it still represented only 10.4% of respondents. “However, this was overshadowed by a more substantial 1.3 percentage point rise in the proportion of individuals who believed it was a bad time for major purchases to 68.1%,” Bolduc said.
In his commentary, Bolduc noted “despite a promising moderation in inflation, the rising cost of living remains a concerning factor.”
He pointed out the Consumer Price Index (CPI) report for June indicated an inflation rate of 2.8%. While this suggested progress was being made towards the Bank of Canada’s inflation goals and the efforts to control it, consumers continue to be troubled by the cost of living and cited the bank’s own survey which revealed that 48% of respondents found it to be their primary concern.
“The increasing prices of essentials, particularly groceries, have contributed to this apprehension,” he said. “Last quarter, every month had increases in grocery prices close to 10% year-over-year. Additionally, the recent 25-point hike in interest rates adds further financial pressure on homeowners through increased mortgage costs. If the elevated cost of living persists, consumer confidence may experience a decline due to heightened financial burdens.”