Consumer Confidence Climbs In The U.S., Falters In Canada
Despite the media headlines, consumer confidence in the U.S. finished Q1 on a high note. The Nielsen Global Survey of Consumer Confidence and Spending Intentions found confidence in the country above its optimism baseline (100) at 110. In contrast, confidence among Canada’s consumers slipped six points to 93.
The survey found that U.S. consumers’ expectations in first quarter 2016 for personal finances (68 percent), immediate spending intentions (56 percent) and job prospects (52 percent) were good to excellent. These represent increases of eight, three and seven percentage points, respectively, from fourth quarter 2015. Discretionary spending intentions also showed an increase in first quarter, with paying debts rising eight points to 33 percent, out-of-home entertainment expenses increasing seven points to 21 percent and retirement savings up five points to 20 percent.
“The U.S. economy continues to be driven by consumers,” says Louise Keely, senior vice president, Nielsen, and president, The Demand Institute. “Enough jobs are being added that unemployment is falling and the participation rate is finally rising, and wage growth is sound. U.S. consumer sentiment is consistent with recent spending growth and a robust housing market that result from stronger labor markets. Still, confidence is subject to influence by overall political and economic volatility that Americans experience: The U.S. is in the midst of a presidential election cycle and there is global economic uncertainty as well as recent terrorism concerns. We continue to watch American consumer confidence levels closely.”
Nielsen reports that consumer confidence in Canada is at its lowest level in four years. Optimism about job prospects slipped nine points to 37 percent—the lowest level Nielsen has registered for the country since 2009—while perceptions about personal finances are down two points to 56 percent and at 37 percent immediate spending intentions are short four points from the previous quarter.
“Canada’s unemployment level is at 7.1 percent, up 0.3 points from last year, and job creation is shifting from the west to eastern Canada, as the economy adjusts to the impact of a softening oil industry,” says Carman Allison, vice president, Nielsen Consumer Insights. “The low Canadian dollar and rising food prices continue to affect consumer purchasing power, as a large portion of goods (especially fresh fruits and vegetables) are imported from the U.S., and consumers are adjusting to higher prices by making trade-offs. For example, beef prices have risen 15 percent, resulting in an eight-percent volume decline in beef consumption, as consumers shift to less expensive kinds of meat such as pork, chicken and sausages. Despite economic uncertainty, however, consumer packaged-goods dollar sales have reached a five-year high, ending 2015 up 3.4 percent, driven primarily by rising prices.”
Nielsen’s full first quarter 2016 consumer confidence report is available here.