Canadian consumers are ending 2014 on a grumpy note.
The Bloomberg Nanos Canadian Confidence Index fell to 55.1 in the final reading of the year, the lowest since May, 2013. Expectations for the economy have tumbled amid a plunge in the price of oil, the nation's largest export, and with the currency at the weakest in more than five years. Views on housing have also dropped in the weekly sentiment gauge.
"As we close out 2014, the forward view on the economy from a consumer standpoint is trending negatively," said Nik Nanos, Ottawa-based chairman of Nanos Research Group. "Roll up a drop in the price of oil, a lower Canadian dollar and softening view on the value of real estate, and an environment is emerging which could lead to a tumultuous 2015."
The 48-per-cent drop since June in crude prices has prompted companies to scale back investment, and governments to trim their outlook for revenue, providing another drag on an economy the Bank of Canada says is still two years away from a full recovery. The Canadian dollar is down 8.7 per cent this year versus the U.S. dollar amid the oil rout.
The Nanos index is derived from weekly polling based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points, 19 times out of 20. Respondents are asked about their expectations for the economy and real estate prices, their job security and changes in the state of their personal finances.
The impact of a weakening dollar and falling oil prices, which began sliding in June, is damping expectations for future growth and real estate prices. It hasn't yet affected pocketbook issues such as job security to the same extent, according to weekly polling.
The percentage of respondents who think the economy will strengthen over the next six months fell to 15.2 per cent in the week ended Dec. 26. That's the lowest since 2008. The share of Canadians predicting a worsening economy surged to a 2014-high of 33.3 per cent, more than double readings in the summer.
The share of Canadians who see real estate prices rising over the next six months fell to 32.3 per cent, a 2014 low for that question.
The impact on views about job security and personal finances has been more muted.
The share of respondents in the weekly polling who said their jobs are at least somewhat secure ended the year at 68 per cent, in line with the 2014 average. Responses to a question on personal finances have also been holding steady at 2014 averages.