Canadians Cautiously Optimistic About Economy Heading Into 2011: Survey

Canadians are expressing glimmers of optimism on the economy as we head into the New Year. TNS Canada’s Monthly Consumer Confidence Index showed a slight but significant gain of 2.3 points in January, beginning the year at 98.4.

Canadians also feel slightly better about the present economic situation, as well as their economic prospects for the next six months. Only the Buy Index, which measures consumers’ intent to purchase “big ticket items” showed an ever-so-slight post-holiday decline.

“Consumers are teasing us” said Norman Baillie-David, Vice President of TNS Canada and Director of the Marketing and Social Research firm’s monthly tracking study.

“Canadians haven’t been able to decide whether or not to invest their emotional capital into trusting the economy on a sustained basis. Confidence has been jumping up and down for the last six months. January’s numbers are up, but it’s too early to tell whether or not they’ll be up again as we progress into the year. Canadians are looking for some signal that will make us able to trust in the economy on a sustained basis.”

The Present Situation Index, which captures evaluations of the overall state of the current economic and employment situation, has also rebounded after a marked drop in December.

After falling 4.5 points to end the year at 89.0, the index gained 3.6 points to 92.6 in January. The Expectations Index, which measures consumers’ outlook for the economy, household income and employment in the next six months, saw a 3.2 point increase to open the year at 107.8 – the highest the index has been since May 2010; and another reason to be hopeful that the confidence is here to stay.

The Buy Index, which gauges the degree to which people think the current period is a good time to make major purchases, saw a slight decrease to open 2011, which is not uncommon in January.

“It’s also interesting to note the slight decline of 0.3 points in the Buy Index as Canadian consumers ratchet back some of their spending plans in the wake of January bills. While normally a decrease in the Buy Index would represent bad news, this slight decline – even if only temporary – at least shows that some Canadian consumers are heeding the message to watch their debt. We’ll see in February whether or not that message sticks.”

This is also borne out by the fact that Canadians say they actually spent a tad less this past holiday season, with an average of $1,008, compared to last year’s average or $1,024.

Consumer Confidence Index tracks Canadians’ attitudes about the economy each month and is part of a global study conducted by TNS in 18 countries. Three indices are produced each month to show how confidence in the economy is changing: Present Situation Index; an Expectations Index; and a Buy Index.

The Canadian fieldwork is conducted using the firm’s national bi-weekly telephone omnibus service, TNS Express Telephone. A total of 1,015 nationally representative Canadian adults were interviewed between January 10 and 13, 2011.

For a survey sample of this size, the margin of sampling error is plus or minus 3.1 percentage points, 19 times out of 20.