TORONTO (Reuters) - Canadian consumers were less optimistic about the economy in January, according to a survey by the country’s biggest bank, while another poll showed overall consumer confidence leapt to a 23-month high.
The contradictory results partly reflect different questions asked in the surveys by Royal Bank of Canada and the Conference Board of Canada, but also reveal a high degree of uncertainty surrounding economic recovery.
The RBC Monthly Canadian Consumer Outlook Index, released on Monday, dipped 2 points to 106 in January from December.
Fifty-two percent of RBC respondents in January described the economy as bad and 48 percent as good. In December, 51 percent viewed it as good and 49 percent viewed it as bad.
Also, 56 percent of Canadians expected the economy to improve over the next year, down from 60 percent in December. RBC attributed the reduction in optimism to more Canadians planning to hold off on major purchases such as cars, vacations and appliances due to current economic conditions.
The percentage of people who expect the economy to get worse remained unchanged at 17 percent.
By contrast, the Conference Board survey, released on Monday, revealed “positive sentiment was widespread in January”, with more upbeat responses to all the questions it asked: the state of current personal finances, future personal finances, employment and major purchases.
“The balance of opinion improved on all four questions, with responses on consumers’ finances showing the greatest improvement. However, responses on future employment opportunities also showed strength,” it said.
Data last week showed Canada’s economic recovery picked up speed in November and stronger than expected growth fueled expectations of a solid fourth quarter. Employment figures to be released this week should show further improvement.
According to RBC, slightly more than one in four Canadians, or 26 percent, say that a member of their household is worried about losing their job or being laid off, up from 21 percent in December. Job anxiety rose in every province.
The conference board reported that 26.7 percent of Canadians expect there to be more job opportunities in their communities six months from now, up 2.6 percentage points from December and the highest positive response recorded since the monthly poll began in 2002.
Only 17.4 percent expected fewer jobs, compared with 50 percent who held that view a year earlier.
Only RBC asked about personal debt levels, finding that nearly 60 percent of respondents were worried about their debt level, although those older than 55 expressed less concern, likely because fewer of them are still carrying heavy debt loads.
Regarding overall personal finances, both surveys reported a better outlook. The portion of Canadians who think their personal financial situation will improve over the next three months rose to 32 percent in January from 30 percent in December, and more than four in 10 expect an improvement over the next year, according to RBC.
The Conference Board found the number of consumers who were more confident in their future personal finances jumped 6.8 percentage points in the month to 33.5 percent and those who felt their finances would deteriorate dropped to 10.6 percent, the lowest level in nearly two years.
The survey comes weeks after the Bank of Canada urged caution on household debt. Governor Mark Carney has been reminding Canadians to manage their personal finances so they will still be able to handle them in “ordinary times” when the central bank raises interest rates again.
RBC’s report showed Carney’s remarks may have had an impact. Sixty-eight percent expected interest rates to rise in the next six months, compared with 57 percent in December.
Canadian rates have been at historic lows since April and the central bank has pledged to hold them there until the end of June, as long as inflation remains in check.
The RBC index is based on an online survey of 1,014 Canadians, ages 18 and over, conducted between January 8 and 14.
The Conference Board survey was conducted between January 7 and January 24 and has a margin of error of plus or minus 1.8 percent.
Reporting by Ka Yan Ng and Louise Egan; Editing by Jeffrey Hodgson and Peter Galloway