Business leaders’ confidence sours on Canadian economy: survey

OTTAWA — Business leaders’ confidence in the Canadian economy has soured as of the first quarter of the year, according to a survey by the Conference Board of Canada.

The Ottawa-based research organization’s Index of Business Confidence fell 6.9 points to 93.1, its lowest level in the last six quarters and an indicator of growing pessimism in the state of the economy.

The survey was conducted March 9 to April 13.

Executives don’t expect the rapid sales growth of 2017 to continue, but they’re also concerned about the impact of government policy on business competitiveness (cited by half the firms); the availability of labour (40%); and the cost of labour. Also cited were the competitiveness of the Canadian economy in the face of US tax cuts; a weak Canadian dollar; and an uncertain future for NAFTA.

“The first-quarter results for 2018 are closer to the 2016 average, a sign that businesses see the economy moving into a new, slower-growth phase,” said Matthew Stewart, the Conference Board’s director, national forecasting.

The survey results show weaker financial expectations and investment intentions.

Firms that believe now is a good time to invest in machinery and equipment declined from 52% to 34%, while the number of those who see this as a bad time to invest rose from 17% to 21%.

Those planning to increase capital investment by at least 10% fell from 28% in the previous quarter to 22%. Firms that anticipate capital expenditures to increase fell two points but are still at 60%.

Expectations for the overall Canadian economy have also worsened. The balance of opinion (respondents believing economic conditions will be better in six months minus those who project that conditions will be worse) was at 19 percentage points in the previous survey. It is now negative, at – 6 percentage points.