A rising currency and a red-hot labour market has sent Canadian consumer confidence to the highest in three years.
The Bloomberg Nanos Canadian Confidence Index — a gauge based on telephone polling — climbed to 60.5 in the week ended Aug. 4, the highest since July 2014 and close to a record.
The better vibes suggest Canadians are shrugging off the impact of higher borrowing costs after the Bank of Canada raised interest rates last month, focusing instead on an accelerating economy that has driven the jobless rate to the lowest point since 2008 and the purchasing power benefits that come with a higher dollar, which bodes well for a continuation of the household spending that has been fueling the nation’s expansion.
Central Bank Governor Stephen Poloz raised rates for the first time in seven years on July 12 and signaled more may be coming. That helped Canada’s dollar break through the 80-U.S.-cent mark last month for the first time in two years.
Consumer confidence has tended recently to move in the same direction as the central bank’s rate decisions. In the few weeks after the January 2015 cut, for example, the Nanos index dropped steadily before rebounding. It declined again after the July 2015 reduction to a two-year low.
The polling showed sentiment gains were broad-based, and have completely offset housing-sector worries. The share of people who believe the economy will strengthen is the highest in seven years at 32.3 percent, according to the polling. The figure climbed from 28.1 percent in the prior edition and from 22.1 percent a month ago.
The polling figures showed only 8.7% of people are uneasy about their jobs, the lowest on record. Canadians also feel better about personal finances, with 20.2% saying their balance sheets are stronger than a year ago, the highest reading for this measure since September 2016.
