Economic Confidence Index Falls 10.86 Points As Interest Rate Outlook Wanes

Toronto, ON- The Ipsos-Reid Canadian Monthly Economic Confidence Monitor, conducted late November 2003, finds that while three quarters (76%) of Canadians continue to describe the current economy as "good" and nearly four in ten (36%) continue to believe the national economy will improve over the next year, the aggregate index, provided exclusively to the Report on Business Section of the Globe and Mail, has fallen from 110.71 to 99.85 since our last sounding in late October. A similar drop was recorded in March 2003.

The Canadian Economic Confidence Index, developed by Ipsos-Reid, functions as a predictor for the Canadian economy. The aggregate index, or economic confidence outlook, contains six elements: one-year outlook for personal financial prospects; Canadians' job security; Canadians' home purchase intentions; Canadians' predictions for interest rates; spending intentions on big-ticket items; and spending intentions on everyday items.

At this time, a major contributing factor to the index drop is expectations that interest rates will go down in the next six months (8% today, 12% in October), which has shifted over the past month from a positive factor to a negative one. Expectations that one's personal economic situation will improve (34% today, unchanged), expectations about major purchases in the next year (26% likely to spend more in the next year, 28% in October), and expectations about day-to-day spending in the next year (30% likely to spend more in the next year, 31% in October) also continue to soften economic confidence, as they have for the past number of months.

However, the fundamentals are still in place. The Economic Confidence Index continues to be fuelled by positive home purchase intentions (13% likely to buy at this time--5% "very likely," 8% "somewhat likely") and low job anxiety (20% worried about job loss), although to a lesser degree than one month ago (14% likely to purchase a home in October; 18% worried about job loss in October).

These are the findings of an Ipsos-Reid poll conducted between November 18th and November 20th, 2003. The poll is based on a randomly selected sample of 1055 adult Canadians. With a sample of this size, the results are considered accurate to within 177 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 statistically weighted to ensure the sample's regional and age/sex composition reflects that of the actual Canadian population according to the 2001 Census data.

Please open the attached PDF files to view the complete release and detailed tables.

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For more information on this news release, please contact:
John Wright
Senior Vice-President
Ipsos-Reid Public Affairs
(416) 324-2900