Business leaders are becoming more pessimistic about the state of the Canadian economy, says The Conference Board of Canada’s latest Index of Business Confidence.
The Index fell 6.9 points to 93.1 in the first quarter of 2018, which is the lowest level in the last six quarters.
Contributing to this increase in pessimism, among the business leaders surveyed, is the fact they do not expect the rapid sales growth they saw in 2017 to continue, said the Conference Board in a May 7 announcement. In addition, there is concern about the impact of government policy on business competitiveness and about the availability of labour. The business leaders also report increased concern about the competitiveness of the Canadian economy in the face of U.S. tax cuts, a weak Canadian dollar, and an uncertain future for NAFTA.
"Canada's businesses had been experiencing relatively high levels of confidence in the economy throughout most of 2017 but, business confidence reversed course in the final quarter of the year,” says Matthew Stewart, director, national forecasting, The Conference Board of Canada. “The first-quarter results for 2018 are closer to the 2016 average, a sign that businesses see the economy moving into a new, slower-growth phase.”
Expectations for the overall Canadian economy have also worsened considerably among the businesses surveyed. “The balance of opinion (respondents believing economic conditions will be better in six months minus those who project that conditions will be worse) was at 19 percentage points in the previous survey. It is now negative, at –6 percentage points,” says the Conference Board.