July 27, 2010 / 2:10 PM / 7 years ago

Canadian consumer and business confidence mixed

OTTAWA (Reuters) - Consumer confidence in Canada faltered for a second straight month in July with optimism on jobs taking the biggest hit, but business sentiment was generally upbeat, two surveys showed on Tuesday.

The Conference Board of Canada said a drop in optimism was felt across all regions with the biggest fall in British Columbia. Respondents were less rosy about jobs, current income, and making major purchases.

Overall, consumer confidence fell 3.7 points in July from June to a level of 80.0 on the Conference Board’s scale.

By contrast, the Canadian Institute of Chartered Accountants (CICA) and Royal Bank of Canada said optimism about the future prospects of the domestic economy has been sustained after sharply rebounding over several quarters.

The CICA/RBC Business Monitor for the second quarter showed 57 percent of top level executives with first-hand knowledge about the financial performance of Canadian companies indicated they were optimistic about the economy’s prospects over the next 12 months. That was down slightly from 61 percent in the first quarter.

But measures for the next 12 months relating to revenues, profits and employment numbers showed positive projections from the executives. Optimism was at levels well above the 28 percent seen a year ago, and running close to the peak of 67 percent reached in the second quarter of 2007.

“Significant distance has been traveled on the journey toward economic recovery but many executive (chartered accountants) are not prepared to let their guard down,” said Kevin Dancey, CICA’s president and chief executive.

The pair of surveys appear to back a recent view by the Bank of Canada, which said that the consumer has carried the Canadian economy out of recession, but business investment has not bounced back after shrinking during the recession.

The Conference Board said consumer confidence fell the most in regard to employment prospects, despite strong employment data. The economy created 93,200 jobs in June, adding to gains made in recent months that nearly make up for the 417,000 jobs lost during the recession.

But only 20.7 percent of respondents foresaw more jobs in their communities six months from now, down 2.4 percentage points from June. There was also a 1.7 percentage point increase in those expecting fewer jobs.

The Conference Board survey showed less certainty about making major purchases. Close to 43 percent of respondents felt it was a good time to make a major purchase, down 0.2 percentage points from June, but this was accompanied by a 0.7 percentage increase, to 45.2 percent, among those who felt it was a bad time.

The introduction of new sales tax regimes in Ontario and British Columbia may have contributed to a slightly less optimistic view on current income situations, the Conference Board said.

In July, 15.5 percent of respondents said they were in a more favorable financial position than they were six months earlier, which was the same level as in the June survey. But there was a 2.3 percentage point rise, to 23.6 percent, in the number of respondents who felt they were worse off.

The latest Conference Board survey, with a margin of error of plus or minus 2.2 percent, was based on more than 2,000 telephone interviews conducted between July 8 and July 18.

The CICA/RBC Business Monitor was conducted June 8-30 with a margin of error of plus or minus 4.8 percent.

Reporting by Ka Yan Ng; editing by Peter Galloway and Rob Wilson

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