Canadian’s confidence in economic conditions declined modestly in the past few months, following a healthy surge over the Spring.

Based on a nation-wide survey conducted by Decima Research Inc. in August, the Decima-Investors Group Index of Canadian Consumer Confidence now stands at 85.5, down 2.9 points since May. Despite this modest decline, consumer confidence remains higher than it has been for much of the previous 12 months.

This latest movement closely matches a similar trend in the United States, and reflects lowering expectations about what will happen over the next six months.

South of the border, the Index of Consumer Sentiment published by the University of Michigan declined to 89.3 in August, down 2.8 points since May.

“The consumer confidence index is down because the global and domestic news has been much gloomier in August than in May,” said Charles Feaver, vice president of research for Investors Group, in a news release.

The drop in consumer sentiment is evident across the country except Atlantic Canada, where the index has risen by more than four points and is now at 88.9, leading all regions. The decline in confidence is most notable Quebec (down 4.0), Ontario (down 3.8) and British Columbia (down 4.1).

“This latest trend likely has a number of sources, as consumers in different parts of the country could pick from any of a number of recent events that could spell problems for the economy, whether it is SARS, the West Nile Virus, the BSE scare, forest fires in B.C. and the recent power outage affecting Ontario”, said Keith Neuman, senior vice president at Decima Research.

“South of the border, however, declining confidence in future economic conditions is more apt to be driven by expectations about higher interest rates, higher inflation and smaller wage gains,” he added.