Confidence among business leaders rose in the final quarter of 2012, as the Conference Board of Canada’s Index of Business Confidence climbed 5.3 points to 97.5. The gain brought the index up to about its average level for the past two years.
Respondents to the board’s survey were more optimistic, thanks to a brighter outlook for the global economy. While firms were more pessimistic about their future finances, they reported improved capacity utilization and a more optimistic investment outlook. The Survey of Business Confidence was conducted over the last three weeks of December 2012.
Compared with the third quarter of 2012, the fourth quarter saw a bounce-back in commodity markets and a slightly improved situation in Europe. Survey respondents were more optimistic about the prospects for the Canadian economy than they were in the previous survey. Among the respondents, 24.8% said they believe economic conditions will be better six months from now, while just 17% said they expect the economy to worsen.
Given that prospects for profitability are linked closely to the economic outlook, it is somewhat surprising that firms are more cautious about their near-term financial positions. The proportion of respondents who said they expected their firm’s financial situation to improve declined relative to the previous survey, going from 50% to 43.6%.
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