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Consumers spending less, stunting growth

Consumer confidence in Canada fell for the fourth consecutive month in September, sending a further signal that household spending is becoming a weak link in economic growth.

Consumer confidence in Canada fell for the fourth consecutive month in September, sending a further signal that household spending is becoming a weak link in economic growth.

The Conference Board of Canada’s consumer confidence index fell 1.2 points this month to 78.1 — more than 18 points below where it stood at the beginning of the year.

“Consumers have taken notice of the slowing pace of economic recovery,” the Ottawa-based think-tank said in its analysis of the survey of 2,000 consumers earlier this month.

Since spring, the recovery has been losing steam with growth rates near two per cent annualized, compared with 5.8 per cent in the first three months of 2010 and 4.9 per cent at the end of 2009.

Today’s report on July gross domestic product is expected to show the first outright decline in GDP since last August.

But Finance Minister Jim Flaherty, while agreeing July GDP may show a contraction, said the economy is on track.

“In July, a lot of things happened in Canada like the introduction of the HST (harmonized sales tax) in two of the largest provinces ... so there are reasons for that. Overall, we’re on track for the year,” he said.

Ontario and British Columbia introduced the new sales tax July 1, while Nova Scotia raised its HST by two percentage points, triggering a retail sales slide in those provinces.

 
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