Businesses are confident enough to boost investment: BDC
Canadian manufacturers among those with big spending plans.
MONTREAL — Canadian entrepreneurs have more confidence in the economy and plan to boost investment to $96.6 billion in 2017, according to a Business Development Bank of Canada (BDC) study. Investments are up 1.6% from the totals invested in 2016.
Seventy per cent of the 3,988 executives at small and mid-sized enterprises (SMEs) surveyed by the Canadian government-owned business bank expect increased business revenue this year. That’s a significant jump from 45% last year, with the strongest growth in investment intentions coming from technology businesses, manufacturers and goods exporters.
As crude oil prices stabilize, Alberta SMEs forecast 17.1% increase in planned investments this year versus 2016. Ontario foresees a 2.9% rise and Quebec a 0.6% increase, while the Atlantic provinces will maintain the 2016 level of investment.
Declines are expected by BC and the territories (5.4%) and the Prairies (17.5%).
Top investing priorities are growth and productivity projects, led by IT, training, machinery, equipment and vehicles.
BDC reports technology firms show the most optimism, with an average of $410,000 in planned investments, up from 41% last year. Manufacturers are second at $340,000.
Obstacles to investment are lack of cash flow and lack of qualified personnel. Two thirds of businesses intend to finance investments mainly with working capital or other internal funds, while less than one in four plan to use a loan or line of credit, despite favourable credit conditions.
Businesses that invest more tend to project higher income growth. Those projecting 20% or higher growth plan to invest an average of $380,000. Even companies expecting zero or negative growth aim to invest an average of $150,000.
The survey was conducted in August and September.