Most Canadians are starting to feel gloomy about the economy, and exporters are no exception, as evidenced by a new survey from Export Development Canada.
The group’s latest semi-annual report on exporter confidence levels, released Thursday, reveals an index that has fallen to 61, a drop of 5.1 points in the past 6 months. It represents the lowest result on record since EDC began measuring trade confidence in 2000.
“There is not a lot of news out there to be excited about, and we expect [that] to continue,” said Stuart Bergman, director of EDC Economics. “We’re starting to see second-round effects through employment numbers, and that will certainly take a toll on not just perception [among] exporters but also on perception [among] businesses at large.”
The survey examines the attitudes of Canadian exporters through five elements: trade opportunities, export sales, domestic sales, and both domestic and global economic conditions. All five elements contributed to the recent drop.
The percentage of exporters expecting their international sales to remain the same or worsen jumped to 62% in the fall, the highest level ever.
Industries singled out by EDC as having particularly low levels of confidence include the resources, transportation and technology sectors.
Regionally, Western Canada posted the most optimistic score of 63 despite declining from 68 since the spring of 2008. Following closely was Quebec at 62 (down from 67), Ontario at 60 (down from 65) and Atlantic Canada at 58 (down from 63).
Some of the more positive findings centered around the potential of emerging markets to help exporters get over the near-term hump. While respondents who believed that international trade opportunities will worsen grew from 23% to 38%, compared to 6 months ago, the number of respondents who believed they would improve also grew to 33% from 28% in the same time frame.
“There are pockets of demand that still exist out there and they will tend to be in the emerging markets,” said Bergman. Key opportunities reside in infrastructure, as markets such as China and Brazil ramp up projects.
“[These countries] are looking to take advantage of the fact that input costs – labour and materials – are lower and to rebuild some of that infrastructure during this downtime,” said Bergman. “We’re also seeing governments increasingly turning to fiscal stimulus [measures] to combat recession….A common form that this is taking is infrastructure spending.”
Another slim ray of sunshine piercing the report’s gloom was exporters’ hiring intentions. The majority of exporters plan to maintain their current level of employment, which could mean no major layoffs are anticipated in the near term.
“Companies have already built their business plans heading into the downturn,” Bergman said.