Canadian consumers continue to show growing confidence in the strength of the economy and the near-term economic future, in sharp contrast to plunging consumer confidence in the U.S., according to the latest quarterly report of the Decima-Investors Group Inc. index of consumer confidence.

The gap between Canadian and American consumer confidence grew to 9.5 points as the Canadian index rose modestly over the past three months while the U.S. index dropped more than five points. The difference is the largest one in favour of Canada since the Decima-Investors Group Index of consumer confidence was established in 2003.

“Since the last measurement, unemployment has remained low, inflation is mild, but interest rates have gone up, and the stock market has weakened,” said Decima CEO Bruce Anderson. “As well, the dollar has gained ground against the U.S. currency, putting some exporters at risk. Oil and gasoline prices continue to be at very high historical levels. This inconsistent mixture of influences has combined to produce a muted effect on consumer confidence, there remains a core confidence in the longer term, somewhat skewed by East-West differences, but something short of a bullish mentality.”

“American consumer confidence has been sharply impacted by rising gas prices according to the most recent University of Michigan survey,” said Bill Chornous, Investors Group investment strategist. But “in Canada, that impact has been softened by positive news on the employment front and comparatively low inflation allowing Canadian consumer confidence to remain relatively strong.”

In Canada, the subcomponents of the index help flesh out the story. A detailed analysis reveals:

– 58% feel it is a good time to make a major purchase
– 51% think the Canadian economy will be even stronger in five years

Both these indicators have recovered eight to 10 points from an ebb that occurred in the fall of 2005, on the heels of rising energy prices and devastating hurricanes in the U.S.

The Decima-Investors Group index of Canadian consumer confidence is based upon a series of five questions that probe perceptions of current and future economic conditions. The Canadian Index is closely modelled on the University of Michigan’s index of consumer sentiment, one of the most widely referenced measures of confidence in the U.S., tracked continuously since 1966.

The data for this index is based on a representative sample of 2,035 Canadians (18 years and older) surveyed between May 25 and June 4. A sample of this size can be considered accurate within plus or minus 2.2%, 19 times out of 20. The Decima teleVox is a national telephone survey conducted weekly by Decima Research Inc. Clients can commission their own customized, proprietary research questions on any of the weekly surveys.