Canadians losing confidence in economy: survey

Thu Feb 9, 2012 5:09am EST
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TORONTO (Reuters) - Global financial uncertainty and slowing job creation made Canadians feel less optimistic about the economy last month, according to a Royal Bank of Canada survey.

Less than a third - 32 percent - of Canadians felt positive about the outlook for the economy over the next year, down from 43 percent in January 2011, and from the 56 percent who were positive two years ago, the poll showed.

The RBC Canadian Consumer Outlook Index released on Thursday revealed only 36 percent of respondents expected their own personal financial situation to improve in the next 12 months, compared with 38 percent in 2011 and 45 percent in 2010.

The online survey was taken January 9 to 16. The Canadian economy added just 2,300 net new jobs in January and the unemployment rate rose to 7.6 percent as global financial uncertainty, including the euro zone debt crisis, weighed on growth.

RBC Chief Economist Craig Wright said in a statement the bank was cautious about the Canadian outlook for 2012 given slowing jobs growth and concerns about the U.S. and European economies.

Another challenge for the Canadian economy has been a spike in household borrowing, triggered by the ultra-low interest rates that followed the recession. Last year, the ratio of debt to disposable income climbed to a record 153 percent and is approaching levels seen in the United States before the financial crisis.

The RBC survey showed that while Canadians have reduced their average personal non-mortgage debt to C$11,729 ($11,800) from C$13,020 in the last quarter, 57 percent have no savings set aside for an emergency.

However, almost a third of those surveyed said they intended to focus on reducing debt and spending less over the course of the next year.

The survey, launched in November 2009, garnered responses from 4,479 Canadians across the country and has an estimated margin of error of plus or minus 1.65 percentage points, 19 times out of 20.

($1=$0.995 Canadian)

(Reporting By Jon Cook; Editing by Jeffrey Hodgson and Peter Galloway)