Canadian Manufacturing

U.S. business executives’ confidence in the Canadian economy weakens: study

by CM Staff   

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The report notes red tape or regulatory uncertainty (65%), followed by monetary policy, costs, rising interest rates and inflation (50%) and labour shortages (35%) are their top concerns for conducting business in Canada.

TORONTO — The American Chamber of Commerce in Canada (AMCHAM Canada) announced the results of the ‘AmCham-Nanos American Investment in Canada Index (ANAIC Index),’ conducted by Nanos and presented by PNC Bank. The semi-annual study suggests that U.S. business executives’ sentiment on the Canadian economy is at an all-time low.

The report notes red tape or regulatory uncertainty (65%), followed by monetary policy, costs, rising interest rates and inflation (50%) and labour shortages (35%) are their top concerns for conducting business in Canada. However, sentiment regarding Canada’s business investment environment continues to track upwards – in fact, it’s up 11 points since April 2021.

“In addition to growing concerns around regulatory uncertainty, monetary policy and labour, nearly 50% of participating U.S. business executives predict the Canadian economy is moving in the wrong direction,” said David Olsen, regional president for PNC Bank in Canada and chair of AmCham Canada. “In the current environment, it has never been more critical to provide companies that operate within the U.S. and Canada with the insights and advice they need to make smart business and financial decisions.”

The research also shows a decline in sentiment on the outlook of the Canadian economy with participating U.S. business executives eight times more likely to say that the Canadian economy will become weaker (66%) rather than stronger (8%) in in the next six months. The proportion of participants who think it will become weaker represents a significant increase of 42 percentage points since the last wave of research in Dec. 2021 and is at an all-time high since tracking started.

About four in 10 U.S. business executives in Canada (42%) report an increase in their sales in Canada in the past six months, a noticeable decrease since Dec. 2021 (58%). Despite that decrease and the declining sentiment on the outlook of the Canadian economy, about one in two participating U.S. business executives (53%) still expect an increase in their sales in Canada over the next six months.

“While regulatory red tape and labour shortages continue to be top concerns of conducting business in Canada, concern over inflation and monetary policy has also become top of mind for participating U.S. business executives,” said Nik Nanos chief data scientist and founder of Nanos Research. “The Amcham-Nanos American Investment in Canada Index (ANAIC Index) fell 19 points since the last wave in December 2021, reaching an all-time low since tracking started.”

The AmCham Canada-Nanos Research ‘American Investment in Canada Index,’ presented by PNC Bank, provides a semi-annual measure of business sentiment among U.S.-owned businesses operating in Canada.

Wave six of the findings are based on an online survey between Sept. 13 and Oct. 12, 2022, of 38 senior executives from U.S. businesses operating in Canada representing a combined total global revenue of $1.2T CAN and a total combined Canadian revenue of $41.7B CAN.

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