The virus is weighing heavily on consumer sentiment according to new data
Later today (Aug. 31) Statistics Canada will release the latest economic growth data with an expectation that the economy grew in June and July.
But will this have a positive effect on Canadian consumers’ confidence which has been trending lower in recent weeks?
The latest reading of the Canadian Confidence Index from Bloomberg and Nanos Research shows a further dip to 62.63 in the past week, down from 64.52 a week earlier and well below the 12-month high of 66.42.
However, confidence is well above the 2021 low of 56.00 seen at the start of the year.
Weighing heavily on sentiment is the virus, with infections remaining high and the spectre of further lockdowns and restrictions on business causing concern.
The sub-indexes tracking personal finances, job security, the value of real estate, and the Canadian economy were all lower than in the previous week. This continues the trend seen over the past four weeks of the index.
While all income groups were less optimistic in the latest poll, it’s those on the lowest incomes that have lost the most confidence.
Younger adults and British Columbians have also lost confidence to a greater degree than other groups.
Economists’ optimism
While consumers may be fearful, a panel of economists polled by Bloomberg are optimistic about the recovery.
For the second quarter, 2.5% growth is forecasted, despite the challenges of the period.
“The main story is the economy managed to churn out a little bit of growth even as much of the country was dealing with heavy restrictions in the spring,” Doug Porter, chief economist at Bank of Montreal, told Bloomberg. “That’s relatively impressive.”
For the third quarter of 2021, all 16 economists are expecting growth of at least 6% with the fourth quarter posting a further 4%.
Business talent gap
For Canada’s businesses, there is another issue that is concerning: their inability to recruit the right talent.
A new survey from KPMG has found that nearly 80% of the businesses surveyed say they need more workers with digital skills, however, better than two thirds are having trouble finding and hiring needed talent.
This is seen as the top threat to businesses’ growth prospects.
"Canadian businesses understand the power of technology and most have been making the necessary investments to digitize their operations," says Mary Jo Fedy, National Enterprise Leader for KPMG in Canada. "The next challenge is ensuring they have the talent to use these new digital tools. While having the right technology is important, it's only effective if your team possesses the skills to leverage it."
