Ottawa, ON – Buoyed by improved sentiment about the economy over the next six months, confidence among Canada’s business leaders rose in the first quarter of 2012. Following declines in each of the first three quarters of 2011, The Conference Board of Canada’s Index of Business Confidence rose 6.6 points in the fourth quarter of 2011 and gained another 2.5 points in the first quarter of 2012 to reach 101.8 (2002 =100).
“Most business leaders expect their firm’s profitability to improve over the next six months, which is a marked increase from the winter survey,” said Pedro Antunes, director, National and Provincial Forecast.
The most significant change this quarter is the sharp rise in the number of business leaders who feel economic conditions will improve over the next six months. Forty-three per cent of respondents said they believe the economy will strengthen, whereas only 19% of respondents felt this way in the previous quarter. Only 9% of respondents thought that the economy will get worse.
Business leaders also expressed greater optimism about the future profitability and financial positions of their firms. Just over 50% of respondents said they expect their firm’s profitability to improve over the next six months, compared with 38% in the last quarter. Only 10% of business leader said they expected profitability to worsen. And 49% of respondents said they expect their financial position to improve, an increase of 10 percentage points from the previous quarter.
Despite more optimism about the future of the Canadian economy, business leaders expressed uncertainty about new investment. Some of the apprehension is reflected in investment intentions – the percentage of respondents who intend to increase capital expenditure by 20% or more is down seven points.