Business leaders losing optimism
Survey reveals gloomy outlook
O T TAWA Just when some economists were starting to see a little light, many of Canada’s business leaders are casting some dark shadows over that outlook.
In fact, about 40 per cent of senior company managers say they have become less hopeful of a strong economic performance over the next 12 months, according to a survey conducted for Chartered Professional Accountants of Canada.
That’s up from 20 per cent polled in the previous three-month period, according to CPA’s thirdquarter poll.
“What a difference a year makes,” said Kevin Dancey, president and CEO of CPA Canada, pointing to the third quarter of 2014 when optimism stood at 48 per cent.
“So far this year, pessimism levels have been higher than usual,” he added. “However, more recently, there have been mixed indicators about where the Canadian economy is heading, including signals of growth, so it will be interesting to see what the next quarterly results reveal.”
The 12-month outlooks by those same business leaders for their own companies, however, have been little changed so far in 2015.
While an optimistic view among top CPA professionals hovered around 46 per cent in the third quarter, that’s still close to the average reading this year of 50 per cent. At the same time, the outlook for improved revenues over the next 12 months remains at about 57 per cent, even though prospects for increased profits now sit at 51 per cent — down from 56 per cent in the second quarter.
As for hiring, only 36 per cent anticipate adding staff in the near future — though that’s basically unchanged from the previous quarter.
The CPA findings come just days after another closely watched survey pointed to a slightly more optimistic path being taken by Canadian companies.
On Friday, the Bank of Canada said its third-quarter business outlook poll showed many senior managers are expecting sales to improve over the next two months — and, in turn, they plan to invest more to expand and take on additional staff.
The central bank’s survey “showed that more businesses are betting on an improving U.S. economy and a cheaper loonie to lift Canada’s economy out of its oil-induced slump,” said David Madini, Canadian economist at Capital Economics.
“(But) we think the Bank of Canada will take this optimism with a grain of salt, and would want stronger proof that the economy is on the road to recovery before ruling out the need for more interest rate cuts.”
Stephen Poloz, the central bank governor, has already cut his key lending rate twice this year — both times by 25 basis points — taking it to the current level of 0.5 per cent.
Policy-makers will announce their next rate decision on Oct. 21 — two days after the federal election — along with their latest quarterly Monetary Policy Report.
After sinking into recession in the first half of 2015, the economy will likely post an annual increase of one per cent.
“There was generally some improvement from the first half of the year,” said BMO Capital Markets chief economist Douglas Porter.