MNI ANALYSIS: BOC Household Confidence Data Shows Q2 Collapse

--MNI Calculations Show Declines In Almost Every Main Question

By Anahita Alinejad and Greg Quinn

     OTTAWA (MNI) - Canadian consumer confidence was the worst on record in the

second quarter with declines in all but one of 13 major questions, an MNI

analysis of BOC data found.

     The MNI summary measure's second-quarter decline to -96 from +78 in the

first quarter is the lowest in comparable data back to the start of 2015. The

previous low was -80 at the start of 2016.

     MNI created a summary measure by assigning weights to questions tied to

future spending decisions in an index adding up to 100 points. That means the

index would move between -100 if every response is weaker than the previous

quarter and to +100 if they all improved. 

     The BOC published its debut quarterly consumer survey in January including

a historical series mostly back to 2014. The central bank's reports don't

include a summary measure like for a business outlook published at the same

time, or the monthly consumer confidence reports from the Conference Board.

     --CAUTIOUS

     The BOC asks questions about whether inflation is seen near the BOC's 2%

target, wages, household spending plans, jobs and interest rates. MNI gave

higher weights to questions more closely linked to consumer spending and to

shorter-term views on the economy, and doesn't weight the magnitude of the

swings. 

     The BOC gathered consumer data from May 11-June 1, a time when health

lockdowns related to Covid-19 were easing but many laid-off workers still faced

uncertainty about being hired back. The BOC reported expected income growth was

the lowest on record at 1.9%, and the share of respondents worried about losing

their job was at a peak of 18%. 

     "Consumers will likely remain cautious for some time to come," based on

figures showing consumer spending plans faltered, Toronto-Dominion Bank

economist Ksenia Bushmeneva wrote in a research report.

--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com

--MNI Ottawa Bureau; +1 613 981-1671; email: anahita.alinejad.ext@marketnews.com

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