By Peter G Hall, Vice-President and Chief Economist

Few of us like mayhem. And there’s a lot of that going around these days. Oil and gas prices are testing new lows. Base metals are back down to 2009 prices. Equity markets are turbulent the world over. Currencies don’t seem to know where to settle. In our information age, whether there’s a direct stake involved or not, the apparent chaos is obvious and alarming. Thus, in spite of rosier predictions by EDC and others, small wonder that Canadian exporters are less confident now than they were in the preceding survey conducted in the spring.

EDC’s latest Trade Confidence Index, built from a survey of 735 Canadian exporters between September 15 and October 5, dipped for the third successive survey, sliding further to 72.8. The level is still consistent with the long-term average value of the index, but seems to run counter to the general expectation that export activity will take the lead in overall growth next year and beyond. Should we worry?

Two of the five Index elements deal with Canadian exporters’ activities inside the country. Although three-quarters of respondents expect domestic conditions to improve or remain the same, a slight rise over the previous survey, expectations for sales here at home posted the second-largest drop among the key questions. This comes in spite of the sharp weakening of the Canadian dollar over the past 18 months.

World economic conditions in the near term are currently the biggest concern for Canadian exporters. Those expecting conditions to improve or remain the same posted the lowest score and the sharpest decline among the five Index elements. The result doesn’t come as a surprise, in light of financial market turbulence and ongoing prominent geopolitical concerns. Perceptions of international business opportunities were also down a shade, although given Canada’s exposure to the resource sector it’s actually encouraging to see that 91 per cent of respondents still see opportunities staying the same or improving over the coming six months.

As interesting as these results are, where the rubber meets the road is export sales. Here, another surprising result. Compared with the spring survey, there was hardly any change in the share of exporters seeing similar or improved international sales. Not only that, but the overall share was the highest for any other Index element, at 94 per cent of those surveyed. What they seem to be telling us is that despite deteriorating conditions and opportunities outside the country, the vast majority of exporters see sales holding up. This suggests that orders are maintaining a steady clip amid market turbulence.

It seems the U.S. market is a key factor. Survey results show that 84 per cent of exporters are selling goods and services across the border, and close to half of these are expecting increased sales. Gloomy news out of Europe doesn’t seem to have nixed Canada’s sales there. Of those currently doing business in Europe, 82 per cent expect sales to hold firm or increase. This is in line with recent GDP growth in Europe, which has been above the long-term average for five consecutive quarters.

The Canadian dollar also seems to be fuelling export sales. Its 20 per cent plunge since mid-2014 is cited by 61 per cent of respondents as being positive for their export sales. At the same time, 34 per cent of exporters are using the weaker loonie to pass on lower costs to their customers.

Across the country, scores are understandably low in Western Canada, but Quebec took the largest survey-to-survey hit, as concern about both domestic and world conditions worsened. Among industries polled, natural resources were among the weakest, but transportation – hit by both domestic and international conditions – saw the largest drop in confidence. Small businesses seem most impacted by developments since the spring, with confidence falling 3.1 points to 72.8. However, the large-company score, while virtually unchanged, was lowest among firm-size results, at 70.1.

The bottom line? Trade confidence is down yet again, but in terms of actual cross-border activity, it seems largely a perception thing. Let’s hope sales live up to expectations.

This commentary is presented for informational purposes only. It is not intended to be a comprehensive or detailed statement on any subject and no representations or warranties, express or implied, are made as to its accuracy, timeliness or completeness. Nothing in this commentary is intended to provide financial, legal, accounting or tax advice nor should it be relied upon. Neither EDC nor the author is liable whatsoever for any loss or damage caused by, or resulting from, any use of or any inaccuracies, errors or omissions in the information provided.