Canadian businesses most optimistic: report

TORONTO—Canadian business optimism is on the rebounded according to the latest Grant Thornton International Business Report (IBR).

Nearly 70 per cent of the 600 Canadian business leaders surveyed felt optimistic, up 19 points from the first quarter of 2012.

Optimism was highest in Western Canada, with a balance of 73 per cent, with Ontario next at 62 per cent, Quebec at 53 per cent and Atlantic Canada at 48 per cent.

The “balance” reported represents the proportion of companies very or slightly optimistic, less those that are slightly or very pessimistic.

Canada reported the highest optimism rate amongst developed economies.

The U.S. was significantly lower at 50 per cent, and the global average was 23 per cent.

Key Canadian sectors construction and real estate (65 per cent), retail (61 per cent) and manufacturing (46 per cent) sat below the national average.

Globally, the proportion of businesses looking to increase investment in new buildings has risen from 15 per cent to 21 per cent over the past 18 months. Anticipated investment in plant and machinery went from 35 per cent to 38 per cent.

In Canada, by contrast, 25 per cent plan to invest in new buildings, 40 per cent in plant and machinery.

However, anticipated investment in research and development sits at just 15 per cent, well below the global average of 25 per cent.

In BRIC countries, 45 per cent of businesses plan to increase investment in R&D over the next year, compared to just 18 per cent of businesses in the G7.

Canadian businesses continue to cite the lack of availability of a skilled workforce (35 per cent) as a constraint to growth. Of those, 43 per cent said the shortage of skilled labour was forcing them to make do with less, 36 per cent say it was increasing their expenses, and 35 per cent say that they must recruit from another region in Canada.

Globally, the top constraint to growth this past quarter was reduced demand/shortage of orders at 33 per cent, while this concern ranked at 10 per cent in Canada.

A balance of 36 per cent of Canadian businesses said their employee count is expected to go up, and 88 per cent are expecting to offer a salary increase—13 per cent plan an increase above inflation.

In addition to the global questionnaire, 85 per cent of respondents from Canada said Canadian businesses should focus on a global approach with less reliance on the US.

When asked which global markets presented the best opportunity for growth, respondents listed Asia Pacific (65 per cent) as the top opportunity for growth, with the U.S. (41 per cent) and Latin America (40 per cent) rounding out the top three. I

In dealing with the US, however, an overwhelming majority (62 per cent) of Canadian businesses said they were concerned about the impact of the high Canadian dollar.

Grant Thornton LLP is an accounting and advisory firm serving private and public organizations.