OTTAWA — Canada’s business leaders are turning bullish about the economy after a year of doom and gloom, a new survey suggests.
The Conference Board of Canada’s fall business confidence survey finds corporate leaders believe the recession is finally over and that the economy will rebound in the next six months.
The mood of confidence is particularly strong considering that recent indicators, particularly gross domestic product data for July and August, were disappointing.
Yet 63 per cent of business leaders surveyed said they expect the economy to improve over the next half-year, as opposed to only seven per cent who thought it will deteriorate.
Significantly, about a year ago the responses were almost exactly reversed.
The 16-point surge in the fall survey brought the confidence index to 97.8, the highest level since 2007.
The survey of about 2,000 representative firms from across the country was conducted between Sept. 14 and Oct. 22.
“After a year of despondency, Canadian business leaders are sensing an end to the deepest recession in a generation,” the Conference Board said about the results.
“Respondents appear very encouraged by signs of nascent recovery. More than half the respondents believe the present is a good time to expand their stock of machinery and equipment.”
Despite the apparent optimism, business still said they were concerned about under-utilization in their production levels, with 29 per cent describing their operations as substantially below capacity.
As well, leaders said they were concerned about the impact a strong dollar will have on their sales, the still weak demand, and about the ease of obtaining financing.
But it is in the forward indicators that business leaders were decidedly optimistic.
Almost 61 per cent said they expected their financial position to improve in the next six months, and more than half expect better profitability.
As well, more than half said it was a good time to expand, with 16 per cent saying they expected to increase their level of capital spending by more than 20 per cent in the next six months.
The Conference Board’s survey is roughly in line with results obtained by the Bank of Canada in September. The central bank’s survey of businesses showed 69 per cent of large firms optimistic their sales would increase in the coming year, and 42 per cent saying they expected to shift to hiring.