The confidence of Canadian exporters and investors rose slightly compared to the previous 6 months, according to a semi-annual survey of Canadian companies released today by Export Development Canada (EDC).
The increase in confidence was largely attributable to more positive views of the European and U.S. economies, an increase in foreign sales opportunities and less pessimism about world economic conditions.
“Exporters are telling us that they feel the worst may be over in Europe, that U.S. customers are ordering more, and that they are more optimistic that world markets will turn a corner in the next six months,” said Peter Hall, Chief Economist, EDC.
The Trade Confidence Index (TCI), which serves as a pulse check of Canadian exporter and investor confidence and their projections around international trade opportunities in the next six months, moved up 1.9 points to 72.6 in the spring of 2013 from 70.7 in the fall of 2012.
“What’s compelling about exporters’ perceptions is that the improvement in sentiment is broadly-based, cutting across all sectors,” Mr. Hall added. “The only sectors not registering greater optimism are mining and the oil/gas industry, which is not surprising given that prices are continuing to slide. Canada’s oil and gas sector continues to face transportation constraints that are weighing on their sales.”
“Regionally, this survey saw a swing of optimism towards Atlantic Canada and Quebec, with the oil/gas industry price slide pinching confidence in the West and Ontario sentiment remaining constant,” Mr. Hall said.
The following is a summary of some top line survey results:
Exporters are seeing higher demand from the U.S.
The survey found that 80 per cent of exporters indicated that orders from their U.S. customers increased or remained the same during the past six months, compared to 75 per cent last fall. This is a strong and growing signal that the U.S. recovery is having an impact on Canadian export sales.
Canadian exporters are continuing to diversify their markets
A third of all companies indicated that they had already started exporting to new markets in the last two years, and about half plan to expand into new countries over the next two years.
Future diversification plans are focused on growth markets, away from the U.S.
When asked about which new countries companies planned to export to in the next two years, the U.S. ranked only 12th, with 5 per cent of respondents. The top five countries were Brazil (12 per cent), China (10 per cent), Germany (9 per cent), U.K. (8 per cent) and Mexico (7 per cent).
Foreign investors see increased sales from their foreign affiliates
Approximately 15 per cent of Canadian companies have foreign direct foreign investments and another 8 per cent have plans to do so in the near future. Of that 15 per cent, 68 per cent believe that sales by their foreign affiliates will increase over the next six months.
The majority of Canadian companies are very ready to function with a dollar at or near parity
The percentage of companies reporting that they are very ready to function with a dollar at parity rose by nearly 10 per cent, reaching 55 per cent (46 per cent in the fall). Those reporting that they were moderately ready accounted for an additional 41 per cent, with only 4 per cent responding that they were not at all prepared.
The TCI survey was conducted in mid-to late-April, 2013. A total of 1,000 Canadian businesses participated, and the TCI was calculated on a total of 760 respondents.