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Canada Businesses Remain Optimistic About Growth

Forty-nine percent of business executives predicted that the economic landscape would continue to improve over the next six months
Almost three-quarters (73%) of business leaders expected to increase turnover in the next year, versus only 3% who forecast a decline in revenues.Almost three-quarters (73%) of business leaders expected to increase turnover in the next year, versus only 3% who forecast a decline in revenues.

YPO, the premier chief executive leadership organization in the world, announced Tuesday that economic confidence among business leaders in Canada edged up in the second quarter of the year.

The Young Presidents’ Organization Global Pulse Confidence Index for Canada climbed 0.8 points to 62.9, its highest level since October 2014. Confidence amongst Canadian business leaders is now a full 10.0 points higher than it was in January 2016, when it was languishing at 52.9, Globenewswire reported.

Since then, sentiment amongst chief executives has steadily climbed, increasing in five of the past six quarters, likely on the back of rising commodity prices, increased tourism and strong economic performance.

For the first time in a year, Canadian confidence surpassed the global composite score of the YPO Global Pulse Confidence Index, which slipped 0.5 point to 62.0 over the second quarter.

Encouraging Signs

Chief executives in the country reported more favorable overall business and economic conditions over the first half of 2017. Almost half (47%) believed that the economic climate had improved in the previous six months, while only 12% felt that conditions had worsened.

Business leaders expressed an even more positive outlook when looking ahead to the second half of the year, as 49% of chief executives predicted that the economic landscape would continue to improve over the next six months, compared to only 9% who felt that conditions would deteriorate.

"These are encouraging signs that the recovery in the Canadian economy is built on solid foundations and is sustainable over the medium term. Recent economic indicators around productivity and employment growth certainly support this feeling of optimism," said YPO member, Devlin Fenton, president of Surespan Digital.

"Business leaders in Canada will be looking to accelerate their growth plans over the coming months, while remaining watchful of potential disruptions, particularly with North American Free Trade Agreement negotiations just around the corner."

Key Findings  

Canadian chief executives were bullish about the prospects for their own organizations over the next 12 months, reporting improved outlooks in each of the three key indicators in the study, namely sales, employment and fixed investment.

The YPO Sales Confidence Index for Canada climbed 1.5 points to 68.8, its highest level since October 2014. Almost three-quarters (73%) of business leaders expected to increase turnover in the next year, versus only 3% who forecast a decline in revenues.

Staying in the region, the YPO Employment Confidence Index jumped 4.0 points to 62.0, suggesting that improvements in employment figures over the past two years are set to continue. Over the next 12 months, 48% of chief executives expected to increase headcount, while only 2% expected to cut staff numbers. Half (50%) predicted that staff numbers would remain unchanged.

Finally, the YPO Fixed Investment Confidence Index edged up 0.3 point to 59.4. More than a third (37%) of chief executives expected to boost levels of investment over the next 12 months, compared to only 6% who predicted reduced investment spend.

Global Review

Globally, the YPO Global Pulse Confidence Index slipped 0.5 point to 62.0 over the second quarter, while executives in Australasia proved to be the most optimistic in the world, as their confidence levels increased 3.6 points to 67.0.

Confidence in the United States remained firmly in positive territory, with a slight decline of 1.6 points to 63.3; while in Asia, confidence declined 1.8 points to 61.5, reversing the gains made in the first quarter of the year.

In the European Union, confidence climbed 2.1 points to 63.0, its highest level in the eight-year history of the YPO study; while executives in non-EU Europe countries indicated a dramatic improvement, up 8.5 points to 60.3, largely due a complete reversal in Swiss sentiment, which was the main detractor in the region last quarter.

Elsewhere, confidence in Latin America climbed 2.1 points to 59.2, its highest level since January 2014. In Africa, business confidence edged up 1.9 points to 56.3, but despite this being its highest level for two years, it retains its position as the second-least confident region.

Confidence in the Middle East and North Africa region slid 4.5 points to 50.7, its lowest rating ever, and making it the least confident region in the world.

 

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