Pessimism about the Canadian economy starting to decrease: CPA Canada Business Monitor (Q4 2022)

Toronto, January 31, 2023 – According to the Chartered Professional Accountants of Canada (CPA Canada) Business Monitor (Q4 2022) survey, respondents are more hopeful for the prospects of the national economy over the next 12 months. Results show a drop in pessimism, from 64 per cent in Q3 to 54 per cent in Q4. Business outlook has remained reasonably stable with 44 per cent of respondents feeling optimistic this quarter versus 40 per cent in Q3.

When looking at key organizational metrics, results show a 10 percentage point increase of respondents anticipating higher company revenues (61 per cent in Q4) when compared to 51 per cent in Q3. Other metrics remain somewhat consistent with almost half of respondents (47 per cent) felt that profits would increase over the next 12 months compared to 42 per cent in Q3. In addition, 41 per cent anticipate a climb in employee numbers, compared to 37 per cent in Q3.

“Although the results point to a less pessimistic view this quarter, there is a lingering concern as to the overall performance of the economy” says David-Alexandre Brassard, CPA Canada’s chief economist. “More positive indicators are needed in the months to come, if we are to see a true shift in sentiment.”

When asked about the main challenge facing the economy, 21 per cent of respondents are now more concerned about higher interest rates versus the 16 per cent who are worried about inflation.
With inflation trending down, a high proportion of respondents (73 per cent) still claim that it is hurting their bottom line and 38 per cent expect that inflation will affect their businesses for at least a year or more.

“Our research continues to show that a large number of business executives are concerned about how long inflation will impact their company,” says Brassard, “This creates concerns around self-sustaining inflation with some international data I have seen showing that supply chain issues are stabilizing or slightly easing.” 
In addition, current economic risks have forced companies to reflect on what to do if business slows down. Over half of respondents (51 per cent) would consider aggressive cost containment, 44 per cent would look at downsizing and 43 per cent would defer business investments.

Methodology

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

For the Q4 2022 study, emailed surveys were completed by 425 of 5,820 people identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). Respondents work for a mix of small, medium and large companies, as determined by employee size. The response rate was 16 per cent, with a margin of error associated with this type of study ±5 per cent, with a confidence level of 95 per cent. The survey was conducted from December 6 to December 21, 2022. Further information can be found in the survey’s background document, which is available online at cpacanada.ca/businessmonitorQ42022.