Holiday spending expected to be even lower than last year
Canadians continue to bob on the consumer confidence front. Two months ago all indicators turned negative. Last month, the future brightened while the present stayed dark.
And this month, the indicators remained mixed. Not surprisingly, Canadians are indicating this will be the lowest spending holiday-spending season since 2005. Overall, results of TNS Canada’s most recent Consumer Confidence Index were essentially flat with the index rising only 1.3 points in November.
“If I were a retailer, I might be clicking my red heels together wishing it were December 2006 and not December 2010,” said Dr. Michael Antecol, vice-president of TNS Canada and director of the marketing research firm’s monthly tracking study.
“Canadians remain ambivalent about the economy. The promised spark of the government stimulus package was DOA. And now Canadians are saying they plan to sit on their wallets this holiday season like Dorothy’s house sat on the Wicked Witch of the West. Expect deep price drops. Expect them soon.”
The Present Situation Index, which captures evaluations of the overall state of the current economic and employment situations, continues to be unsettled.
It returned to positive territory this month after declines of 1.9 in September and 0.7 points in October. The index ended the month at 93.5 – up 2.1 points from October’s 91.4.
The results of the two future-oriented confidence indices were mixed. The Expectations Index, which measures consumers’ estimation of the economy, household income and employment in the next six months, rose 1.4 points to close November at 105.7 points. The gain was a nice complement to October’s 2.0-point gain. Still, both increases were not quite enough to offset September’s 3.5-point drop.
In contrast, the Buy Index, which gauges the degree to which people think the current period is a good time to make major purchases, had its positive momentum stopped cold. After a 4.2-point increase in October, the index closed November at 95.1, up 0.1 points from its October close.
One super clear result of the lacklustre confidence is the findings of TNS’s yearly holiday spending questions. Canadians plan to spend $812 this holiday season – that’s down even from last year’s $866 when the economy was technically in worse shape than it is now.
In fact, this is the lowest predicted spending since 2005 when consumers indicated they spend only $782 over that holiday season. Put another way, while just over 6- in-10 Canadians plan to spend the same as last year, only 1-in-10 plan to spend more and almost 30% plan to spend less.
“Results of the past several months do not suggest that Canadians will achieve any clarity surrounding the economy any time soon. Indicators should continue to fluctuate with ambivalent results being the order of the day. Perhaps Canadians would exude more confidence if they saw more economic leadership from Canadian governments. Still, it is ironic that the economy will really only improve once consumers themselves start spending – for whatever reason,” added Dr. Antecol.
Consumer Confidence Index tracks Canadians’ attitudes about the economy each month and is part of a global study conducted by TNS in 18 countries. Three indices are produced each month to show how confidence in the economy is changing: Present Situation Index; an Expectations Index; and a Buy Index.
The Canadian fieldwork is conducted using the firm’s national bi-weekly telephone omnibus service, TNS Express Telephone. A total of 1,015 nationally representative Canadian adults were interviewed between November 8 and 14, 2010.
For a survey sample of this size, the margin of sampling error is plus or minus 3.1 percentage points, 19 times out of 20.
TNS Canada (www.tns-cf.com) is one of Canada's most prestigious full-service marketing, opinion and social research organizations.
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Toronto, Canada - 22 November 2010