Manulife Survey: Canadians Are Less Willing to Spend

According to the latest debt survey conducted by Manulife Bank (MFC), fewer Canadians say they are likely to buy gifts during the holiday season compared to just a few years before the pandemic.

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They are also unwilling to go into debt to buy them. Many of them plan to be more careful with their spending due to the financial turmoil caused by the pandemic.

Canadians Are More Thrifty

Among respondents to the bi-annual survey, 61% indicated that they plan to buy gifts during the holiday season, a decrease of five percentage points from the fall of 2018.

In addition, only 53% indicated that they were willing to take on debt to buy gifts, up from 61% three years ago. Overall, fewer Canadians are in debt compared to a year ago, but only 22% — six points down from fall 2018 — say their holiday spending budget is higher this year than last year.

Manulife Bank’s Debt Survey also reveals that about three-quarters of Canadians who do not own a house, but want to own one, cannot afford it. Nearly a third of Canadians say their mental health has deteriorated in the past year.

Management Commentary

Manulife president & CEO Rick Lunny said, “This shows us that during the pandemic, many Canadians have been doing an admirable job of paying down their debt and planning for their future. Continuing to exercise some restraint at this point in time could certainly help them achieve their financial goals in the long run.”

Wall Street’s Take

On November 17, National Bank analyst Gabriel Dechaine reiterated a Hold rating on MFC and raised its price target to C$28 (from C$27). This implies 18% upside potential.

The rest of the Street is cautiously optimistic on MFC with a Moderate Buy consensus rating based on four Buys and five Holds. The average Manulife Financial price target of C$31.90 implies 34.5% upside potential to current levels.

TipRanks’ Smart Score

MFC scores a 5 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to be in line with the overall market.