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OTTAWA - The economy received a major vote of confidence Wednesday from business leaders, whose future investments will be critical in determining whether the recovery is sustainable.
The Conference Board of Canada fall survey of business confidence surged to the highest level in two years, a surprisingly bullish result given the flat performance of the economy this summer.
Policy-makers have been asking the private sector to step forward and carry the load on growth and job creation once massive government stimulus starts easing, and the new survey suggests they may be ready to do just that.
A large majority of the 2,000 firms surveyed in September and October said they expect the economy to improve in the next six months.
More importantly, a majority said now was a good time to invest in expansion, with 16 per cent saying they plan to hike capital spending by at least 20 per cent in the next six months.
"After a year of despondency, Canadian business leaders are sensing an end to the deepest recession in a generation," the Conference Board said of the results.
"Respondents appear very encouraged by signs of nascent recovery."
Despite warning clouds on the horizon, Bank of Montreal economist Michael Gregory believes Canadian businesses do have reason for optimism.
The Bank of Canada has stuck to its guns in predicting two per cent growth during the third quarter. Although that is unlikely given the first two months result - flat in July and minus 0.1 per cent in August - it's also likely not far off, he said.
"I think as Canadian businesses dust themselves off from this recession, they are finding they got through OK," he said.
"One of the most amazing factoids is that business bankruptcies actually declined during the recession, as opposed to the '90s and '80s when they went up."
The confidence reading comes as senior government officials warn that governments can't afford to keep spending at current levels for very much longer to prop up the economy.
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