TORONTO, Oct. 25, 2023 (GLOBE NEWSWIRE) -- Economic optimism among business leaders surveyed by CPA Canada is starting to decline, reversing a trend of increases earlier this year, indicating a view that the economy may be softening.
Roughly one in five (19 per cent) respondents to the recent Chartered Professional Accountants of Canada Business Monitor Q3 survey said they are optimistic about the economy over the next 12 months, down from 28 per cent in the second quarter of 2023.
Outlook for Canadian economy
Source: CPA Canada Business Monitor; Get the data; Download image. Created with Datawrapper
Just over one quarter (26 per cent) point to increases in interest rates as the biggest challenge to the growth of the Canadian economy, followed by the rise in inflation (14 per cent) as the next most frequently mentioned challenged.
“The economy is no longer seen as resilient as higher interest rates make their way through the economy and are truly felt across Canada,” says David-Alexandre Brassard, CPA Canada’s chief economist. “The historic surge in population has been behind most of the recent growth in spending and economic activities. Now the underlying economic weaknesses are peeking through.”
Business optimism is also softening somewhat, with 48 per cent of respondents optimistic about the prospects for their businesses in the next year, compared to 56 per cent last quarter. Projected individual organizational metrics are similar to Q2:
- 62 per cent believe their companies will have increased revenue over the next year (compared to 57 per cent in Q2),
- 49 per cent say profits will increase over the next year (identical to Q2), and
- 44 per cent anticipate a climb in employee numbers (compared to 42 per cent in Q2).
A total of 80 per cent of respondents believe that inflation is hurting their own company, with almost half (49 per cent) of all respondents believing that inflation will continue to hurt their company for at least another year.
Over two-thirds of respondents (72 per cent) believe that current interest rates are having a negative impact on their company, and 86 per cent believe current interest rates are having a negative impact on the Canadian economy.
"Higher inflation is sticking around for longer than we would like. Many now see interest rates remaining higher for longer than was initially expected,” adds Brassard. “This in turn increases the chances of a recession. Further rate hikes would be hazardous, but they have not been excluded by the Bank of Canada.”
Methodology
The CPA Canada Business Monitor is issued quarterly, based on a survey conducted by CPA Canada using the survey platform Alchemer. The report draws upon business insights of professional accountants in leadership positions in privately and publicly held companies.
For the Q3 2023 study, emailed surveys were completed by 304 of 6,514 people identified by CPA Canada as holding senior positions in industry (CFOs, CEOs, COOs and other leadership roles). Respondents work for a mix of small, medium and large companies, as determined by employee size. The response rate was 6.8 per cent, with a margin of error associated with this type of study ±5.6 per cent, with a confidence level of 95 per cent. The response rate calculation is calculated as follows: Response Rate = Survey Completes / (Completed Surveys + Incomplete Surveys + Estimated Other Eligible Members in Sample). The survey was conducted from September 13 to October 3, 2023. Further information can be found in the survey’s background document, which is available upon request.
About CPA Canada
Chartered Professional Accountants of Canada (CPA Canada) is one of the largest national accounting organizations in the world, representing the Canadian accounting profession at the national and international levels. With over 220,000 members, CPA Canada supports the profession and acts in the public interest by promoting transparency in financial markets, preparing members for a rapidly evolving business environment and contributing to standard setting and public policy. Globally, it works together with international bodies to build a stronger accounting profession worldwide. cpacanada.ca.
For more information, contact:
Carla Peacock
Manager, Corporate Communications
Chartered Professional Accountants of Canada
647-922-7339
cpeacock@cpacanada.ca
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