Economic pessimism is running ahead of optimism in Canada for the first time since the fourth quarter of 2011, reports Chartered Professional Accountants of Canada (CPA Canada).
CPA Canada Business Monitor
, a quarterly survey of professional accountants in leadership positions finds pessimism continuing its sharp upward climb. Thirty per cent of respondents surveyed in the first quarter of 2015 said they are pessimistic about how the Canadian economy will perform over the next 12 months.
This is up from 19% in Q414 and 7% in Q3; and represents the highest level for economic pessimism since the 30% recorded in Q209.
As expected, with a jump in pessimism comes a drop in economic optimism. Only 23% of survey respondents are optimistic about the prospects for the Canadian economy, down from 33% in Q414 and 48% in Q3. Forty-seven per cent of respondents were neutral in the first quarter of 2015.
Oil prices were cited as the number one challenge to the Canadian economy in the survey.
“That is to be expected,” said Kevin Dancey, president and chief executive officer (CEO), CPA Canada. “Recent retail closings and lingering economic uncertainty, both at home and abroad, are other factors likely contributing to the surge in pessimism. It’s also important to recognise that almost half of the respondents are taking a wait and see approach.”
Only 29% of the survey respondents felt that lower oil prices were beneficial to the country as a whole while 39% believed the price levels benefited their own company.
As with the national economy, pessimism levels also climbed when survey participants were asked about the prospects of their own companies, with 22% expressing a pessimistic outlook for the next 12 months. Company pessimism has not been this high since Q209 when it stood at 25%. Half of those participating in the latest survey like the prospects for their own company, similar to the previous quarter (53%) but down from 62% in Q314.
In terms of the biggest priorities for their companies, increasing sales within Canada was ranked highest by 21% of respondents followed by reducing costs (15%) and improving productivity (12%).
Focusing on revenues, 59% of respondents are forecasting growth over the next 12 months, down from 65% in Q414. For profits, 54% of those surveyed anticipate an increase compared with 62% in Q414.
“The survey respondents obviously have concerns but the outlook is not all doom and gloom,” said Dancey. “There are still a significant number of respondents forecasting increases in revenues and profits.”
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