A recent survey by CPA Canada indicates that business confidence in the Canadian economy has declined. The survey of chartered accountants in both the private and public sectors found that just 9% of businesses are optimistic about the economy for the next 12 months. This is a sharp drop from 52% which was optimistic just a year ago.
This survey found that key concerns for accounting professionals were rising inflation, the rise in interest rates, and the poor state of the global economy. About 75% of the respondents felt that inflation was adversely affecting their companies, with 4 in 10 estimating that this would continue to impact them for at least another year.
There was also a reduction in confidence that the economy would revive. 52% felt that revenues would grow over the next year, down from 74% that held a similar view a year ago. 42% anticipate that profits will increase, 20% less than the previous year.
According to CPA Canada’s chief economist, David-Alexandre Brassard, the decreased optimism was also resulting in cutbacks to hiring plans. The survey indicated that just 37% believed they would have more employees a year from now, compared to a more optimistic estimate of 52% last year.
Another survey by the Canadian Federation of Independent Business (CFIB) found that more businesses are also feeling less optimistic going into the holiday season. Data from the survey found that the 12-month optimism index had fallen to 50 points while the 3-month index dropped to 43.8 points. This is the lowest level since 2009, except for the decline experienced in 2020 which was a pandemic-driven economic slowdown.
The businesses surveyed indicated that growth in fuel and energy costs was the leading contributor to limiting business. Shortages in skilled and unskilled workers were also a key concern. 35% of business owners also confirmed experiencing difficulty with rising borrowing costs as compared to just 16% the previous year.
Retail businesses are typically more optimistic during the holiday period, however, this year the outlook is more dismal as optimism levels were found to have dipped to the third lowest level over the last 12 months. The 3-month index reached 36.5 points while the 12-month index fell to 43.6 points, confirming a low outlook for the retail sector as the busiest shopping period of the year kicks in. 38% of businesses said that they were in good shape, while 18% felt they were in bad shape.
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