By Carman Allison, Director of Industry Insights, The Nielsen Company, Canada
The fragile nature of the worldwide economic recovery is evident by the drop of three Consumer Confidence Index points in quarter three to a level of 90—the first downward trend in a year. Canada is fairing better with a level of 101, which held fairly steady from Q2, down just slightly from 102 and seven index points higher than the confidence level at this same time last year. In contrast, U.S. confidence levels were down sharply from 87 in Q2 to 81 in Q3.
Less Optimistic About Jobs
One reason for the flat or falling confidence levels—a growing concern about jobs. In the month that the Nielsen confidence survey was conducted, the unemployment rate in Canada actually edged down slightly, by 0.1 percentage points, to 8%. Statistics Canada reports that overall employment in Canada rose by 349,000 (up 2.1%) between September 2009 and September 2010.
Still, four in ten Canadians who were surveyed by Nielsen say that job prospects in the country over the next 12 months are “not good” or “bad”. That’s up from 35% who said the same in Q2 of this year (though still below the global average, and well below the stated job concerns in the U.S.).
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|Source: The Nielsen Company|
Less Discretionary Spending
The job concerns in Canada are coupled with less discretionary spending. In fact, for many consumers around the world, spending on non-essential goods has become more restrained this year.
Fourteen percent of global consumers—but a much higher 22% in Canada and 28% in the U.S. —say that they’re left with no spare cash after paying essential living expenses.
Four in 10 Canadians said they are using spare cash to pay off debts (versus a global average of 29%), and that’s up from 34% in Q2. Also up is the percentage of Canadians who are pouring spare cash into savings—36% in Q3 vs. 27% in Q2. All of this repairing of household balance sheets leaves less money available for the spending that can spur the economy. Compared to global spending patterns, a lower percentage of Canadian consumers are spending on every discretionary category in the Nielsen survey.
In Canada, despite the increase in consumer confidence over last year, Canadians remain cautious when it comes to opening their wallets. Consumers are still focused on value, continuing to shop at discount retailers and buying on promotion at record levels.
Will Spending Bounce Back?
In light of the purse tightening, what are the prospects for increased spending by Canadians? Some signs are encouraging. Nielsen asked consumers if this is a good or bad time to buy the things that they need and want. Forty-four percent of Canadians said this is a “good” or “excellent” time, up from 41% in Q2 of 2010 and 37% in Q1. That’s well above both the global and U.S. percentages.
In regards to personal finances over the next 12 months, just over six in 10 Canadians (61%) said “good” or “excellent”. That’s up a bit from 59% in Q2, and is much higher that the 51% of people globally and 46% in the U.S. who feel positive about the state of their finances.
Recession Worries Continue
A little over half of Canadians (54%) think the country is still in recession, down slightly from those who felt so in Q2 (56%) and significantly from Q1 levels (65%). But the concerns are deep; of those who think Canada is in recession, a full one-third (34%) feel that the country will not be out of it in 12 months. Fifty-eight percent of respondents globally—and 88% in the U.S.—say that their country is currently in a recession.
Health Tops Economic Concerns
Nielsen asked consumers around the world to name their biggest concerns over the next six months. Though health topped the list for Canadians, the other top five concerns all related to the economy.
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