Economic optimism climbs sharply: CPA Canada Business Monitor

Optimism about the Canadian economy is up substantially among professional accountants in leadership positions but U.S. trade protectionism is the top challenge, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

TORONTO, August 15, 2017 – Optimism about the Canadian economy is up substantially among professional accountants in leadership positions but U.S. trade protectionism is the top challenge, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

The latest CPA Canada Business Monitor (Q2 2017) polled over 500 business leaders with half (50 per cent) reporting they are optimistic about the prospects of the Canadian economy over the next 12 months. That is up from 38 per cent in the first quarter of 2017 and more than double the 21 per cent who reported feeling optimistic in the same quarter a year earlier.

Roughly four in ten (38 per cent) of the respondents are neutral about what lies ahead for Canada’s economy while 12 per cent have a pessimistic outlook.

Protectionist trade sentiments in the U.S. tops the list of challenges facing the Canadian economy cited by 23 percent of the respondents with oil prices close behind referenced by 19 per cent.

“Canadian business leaders are wary but are not being paralyzed by possible risks.” says Joy Thomas, president and CEO, CPA Canada. “The significant increase in optimism is a reflection of Canada’s economic resilience, especially with continued uncertainty in the United States.”

Potential U.S. tax reform
Almost three-quarters (74 per cent) of those surveyed agree that U.S. tax reform could pose a competitive challenge for Canadian businesses. In terms of business planning for the coming year, 44 per cent of the survey respondents claim the proposed tax reforms will have no affect at all. One-third (33 per cent) of respondents indicate that business planning will be somewhat or significantly affected.

Company specific
Company optimism remains virtually unchanged from the previous quarter and sits at 61 per cent. This relates to how the survey respondents view the prospects for their own companies over the next 12 months.

There was also little change to the forecasts for revenues, profits and employee numbers among the survey respondents.

A large majority (79 per cent) of business leaders surveyed say their company plans to make significant investments over the next year. The most frequent type of investments mentioned were upgrading existing technology (40 per cent) and training employees (29 per cent).

More than eight-in-ten (84 per cent) of the survey participants agree that changes in technology will likely have a major impact on their company over the next five years. However, 77 per cent surveyed agree that their company is well prepared for the changes.

“It’s encouraging to see Canadian businesses reinvesting in technology and their employees and feeling confident in their ability to face coming challenges,” adds Thomas. “Sustainable growth and social development are key values of the Canadian ideal of good business championed by our organization.”

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 2017 study, emailed surveys were completed by 516 of 4,977 identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). The response rate was 13 per cent, with a margin of error associated with this type of study at ±4.1 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 July 6 to July 19, 2017.

A background document is available online at cpacanada.ca/businessmonitor.