Ipsos Reid

Ipsos Reid

June 08, 2005 06:00 ET

IPSOS-REID CDN ECONOMIC CONFIDENCE INDEX DROPS 5.4 POINTS TO 101.3

Interest Rate Predictions, Everyday And Big-Ticket Spending, And Personal Economic Outlook Dampen Confidence; The Silver Lining…Home Purchase Intentions Remain Positive And Job Anxiety Low Attention: Business/Financial Editor TORONTO, ONTARIO--(CCNMatthews - June 8, 2005) - Canadians remain positive about the current economy and the year ahead, but the latest Ipsos-Reid Economic Confidence Index suggests a softening of consumer confidence.

Today, 76% of Canadians describe the future performance of the Canadian economy as "very good" or "good" and most think it will either "improve" (29%) or "stay the same" (53%) over the next year. However, despite this optimism, The Canadian Economic Confidence Index developed by Ipsos-Reid, is down 5.4 points to 101.3
The index functions as a predictor for the Canadian economy. The index is based on six key factors that influence Canadians' expectations about the Canadian economy. These factors are: Expectations that one's own economic situation will improve/worsen; job anxiety; likelihood of purchasing a home in the next six months; expectations of change in interest rates in the next six months; and expectations of spending more/less big-ticket items; and on day-to-day spending.

Interest rate predictions remain the most negative factor, even more so than our last sounding in February 2005. Today half (52%) of Canadians think interest rates will go up in the next six months, while 4% think rates will "go down." Four in ten (41%) believe rates will "remain unchanged."

Expectations about everyday purchase intentions and big-ticket spending in the next year also continue to dampen economic confidence, just as they have since we started producing the index in August 2002. Three in ten (29%) Canadians expect to spend more on everyday items such as groceries, clothing or other personal goods and services than they did last year, while 14% plan to spend less. When it comes to major purchases, 30% plan to spend less than last year and 29% expect to spend more.

In addition, the expectation that one's personal economic situation will improve is softening economic confidence at this time. One-third (33%) of Canadians think their personal economic situation will "improve," while 13% think it will "get worse." Approximately half (53%) of Canadians think their personal economic situation will "stay the same."
Positive home purchasing intentions and low job anxiety continue to give the Canadian Economic Confidence Index a push, but slightly less so than in February. Today, 14% of Canadians indicate that they are likely to buy at this time, with 6% who say they are "very likely." And, just 17% of Canadians are worried about losing their job or someone in their household losing their job.

These are the findings of an Ipsos-Reid poll conducted from May 16th to May 18th, 2005. For the survey, a representative randomly selected sample of 1002 adult Canadians was interviewed by telephone. With a sample of this size, the results are considered accurate to within ± 3.1 percentage points, 19 times out of 20, of what they would have been had the entire adult Canadian population been polled. The margin of error will be larger within regions and for other sub-groupings of the survey population. These data were weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.

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For more information on this news release, please contact:

Dr. Darrell Bricker
President & COO
Ipsos-Reid Public Affairs
(416) 324-2900

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