Consumer, investor confidence holds up

Consumer confidence remained steady for most of 2010 in Canada, according to the Harris/Decima-Investor’s Group Index of Canadian Consumer Confidence.

The overall measure was steady for the last six months after reaching a post-recession high of 89.0 in February. It closed at 82.8 in November.

“Nationally, this year has seen Canadian consumer confidence dip for two consecutive quarters before stabilizing to end the year and remains well above American consumer confidence levels,” according to Doug Anderson, senior vice-president at Harris/Decima. “However, this national assessment masks the diversity of confidence levels and trends we see regionally.”

In Atlantic Canada, the index reached a peak of 91.1, topping the national numbers, but dropped to 80.6 in Q3 and then 80.3 in Q4.

In Quebec, the index remained above the national average for the entire year, peaking at 92.0 in February.

Manitoba and Saskatchewan also had a strong year. In Q1, the index stood at 91.0, climbing upwards ever so slightly to 91.7 in Q2. By Q3, the index had dropped to 85.8 but then rose again to 88.3 in Q4.

Ontario, however, saw a bit of a mixed bag. In the first quarter, the index stood at 86.5. But by Q3, the index had fallen to 76.8, before ending the year at 81.5 in Q4.

Consumer confidence in Alberta remained relatively consistent in 2010, closing out Q4 with 86.2. But confidence was lowest in B.C., falling from 88.3 in Q1 to 78.4 in Q4.

“Canadians appear to show continued confidence in the long-term outlook for the economy as well as their own personal financial situation,” said Jack Courtney, assistant vice-president, advanced financial planning, at Investors Group. “We believe that setting long-term goals and developing a plan to achieve them is the best approach to financial well-being.”

Meanwhile, south of the border, the Conference Board’s index of consumer confidence slipped to 52.5 in December, slightly below the Board’s expectations of 55.5.

Confidence did rise, however, for those earning more than $50,000. According to the Conference Board, this likely reflects the recently passed tax package that extended the Bush-era tax cuts.

Overall, the Conference Board admits that the report was weaker than expected, but retail sales and real consumption expenditures have been gaining momentum with holiday shopping, and reports from retailers on holiday sales have been, by and large, optimistic.

Investors Meanwhile, according to the State Street Investor Confidence Index, global investor confidence rose from 96.4 in November to 104.4 in December. In North America, confidence rose to 103.1 from November’s 95.4.

But investor confidence was not as positive among European investors: the index decreased to 99 from 109.8 in November.

In Asia, confidence increased to 102.9 in December from 95.5 in November.

“This month the confidence of institutional investors has continued its late-year improvement. Clearly, the scenario for moderated world growth with recovery in the U.S. has increasingly gained traction,” said Harvard professor Kenneth Froot, who co-developed the index. “Confidence in both North America and Asia has now edged above the neutral level of 100, after a relatively weak mid-2010.”