Major Jump in Confidence Among Canadian Execs

Canadian businesses believe the economy is improving and capital will become available, according to a new report

Written by Advisor Staff

Canadian executives’ optimism about the economy has spiked over the last six months, according to Ernst & Young’s latest Canadian Capital Confidence Barometer.

The percentage of execs who believe the country’s economy is improving is up to 56% from only 29% in October, with access to capital, employment growth and corporate earnings all showing positive gains.

Source: Ernst & Young

“Our survey indicates that confidence in credit availability has rebounded significantly,” says Tony Ianni, transaction advisory services partner at Ernst & Young. “In Canada, 45% of respondents reported access to capital is improving, up from only 20% in October. This is good news because with access to capital, businesses are in a better position to create jobs, invest in innovation and implement plans to grow.”

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Thirty-seven percent expect their business to create jobs and hire talent. And when it comes to growth strategies, while fewer Canadian companies expect to pursue an acquisition in the next 12 months (33%, down from 44% in October and 48% a year ago), they’re more likely to exploit technology and develop new markets and products than their U.S. and global counterparts.

“The results show that Canadian companies remain cautious,” explains Ianni. “They’re focusing on their core assets, and taking a wait-and-see approach when it comes to mergers, acquisitions, sales and divestments.”

A supplemental survey shows 67% of Canadian respondents report that they’re worried about the effect of continuing uncertainty in the global economy on their business. However, while they plan to exercise caution over the next 12 months, they’re optimistic about the longer term.

“More businesses report seeing expansion in the next 24 months, and even more in the next three years,” says Ianni. For those companies planning expansion, 83% expect it to come from existing markets.

Ianni adds, “Canadian businesses are assessing deal opportunities more rigorously. While they’re confident in the Canadian economy, they’re waiting to see what happens on the global scale.”

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