Economic uncertainty dominates latest CPA Canada Business Monitor

Professional accountants in leadership positions clearly have reservations about how the national economy will perform over the next 12 months, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

TORONTO, July 26, 2016 Professional accountants in leadership positions clearly have reservations about how the national economy will perform over the next 12 months, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

The latest CPA Canada Business Monitor (Q2 2016) finds lingering economic uncertainty at home while those surveyed also expressed concern about possible protectionist actions in the United States along with the fallout from the recent Brexit vote.

Just over half (53 per cent) of the business leaders surveyed are neutral about the prospects for the Canadian economy, up from 47 per cent in the opening quarter of 2016. More than a quarter (26 per cent) expressed a pessimistic viewpoint about what lies ahead economically while 21 per cent are optimistic.

Oil continued to lead the way for the seventh consecutive quarter as the number one challenge to the growth of the Canadian economy. It was followed by uncertainty surrounding the Canadian economy with the status of the global and U.S. economies close behind.

“The survey findings are not surprising as Canadian business leaders must confront challenges at home and brace for possible repercussions from elsewhere,” says Joy Thomas, president and CEO of CPA Canada. “Oil prices, a coming U.S. election and Brexit are all factors likely contributing to the wait and see approach.”

Impact of the Brexit vote

The professional accountants surveyed believe the Brexit vote will have ramifications both here in Canada and globally. Some findings:

  • 72 per cent believed it would have a negative impact on the global economy
  • 40 per cent answered that there would be a negative impact on the Canadian econom
  • Roughly three quarters (78 per cent) believe that negotiating a trade deal with the U.K. should be a priority for the Canadian governmen
  • However, in terms of the Canadian/U.K. trading relationship, 63 per cent surveyed were not concerned this relationship would be hindered

Thoughts on the United States

Almost half (49 per cent) of the survey respondents believe the U.S. economy is growing (either moderately or considerably) with almost all of them saying moderately. Despite this finding, 45 per cent of those surveyed still only offered a neutral view for the prospects of the U.S. economy over the next 12 months. With a looming presidential election, roughly seven-in-ten (69 per cent) of the respondents are concerned that the new U.S. president, no matter who is elected, will enact more restrictive trade policies with Canada.

Company specific

Business optimism sits at 46 per cent which is basically unchanged from the previous quarter. These findings reveal how the survey respondents viewed the prospects for their own companies over the next 12 months.

Focusing on revenues, 62 per cent of the respondents are projecting growth over the next 12 months, compared with 59 per cent in Q1 2016.  For profits, 55 per cent of those surveyed anticipate an increase, compared to 51 per cent in the previous quarter.

Turning to employee numbers, 36 per cent of those surveyed predict growth at their company, almost identical to the year’s opening quarter. Thirty-eight per cent of the respondents anticipate no change while 25 per cent expect a drop.

Methodology

The CPA Canada Business Monitor is issued quarterly, based on a survey commissioned by CPA Canada and conducted by Harris Poll. The report draws upon business insights of professional accountants in leadership positions in privately and publicly held companies.

For the Q2 2016 study, emailed surveys were completed by 486 of 5,230 identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). The response rate was 11 per cent, with a margin of error associated with this type of study at ±4.4 per cent, with a confidence level of 95 per cent. Further information regarding response rate calculations can be found in the survey’s background document. The survey was conducted from June 24 to July 11, 2016. A background document is available online at cpacanada.ca/businessmonitor.