“We’re really seeing economic momentum building as vaccine rollouts progress and countries take further steps to reopen,” said EDC Chief Economist Peter Hall. “With key countries across the world slowly beginning to normalize, Canadian exporters are feeling optimistic about near-term growth prospects.”
The mid-year Trade Confidence Index (TCI) showed enormous progress, rising 19% to 80.5 from 67.5 at the end of 2020. This is the largest increase between two surveys, since the EDC survey began in 1999.
For the second consecutive survey, all five TCI index elements as well as firm sizes, regions of the country, and sectors showed improvements. Among the index elements, improved outlooks for overall economic conditions — both domestic and global – saw the greatest increase. EDC is also seeing a broad-based recovery across all regions of the country. The West has the lowest confidence (76.4) score, while Quebec experienced the largest increase, up 18.7 points to reach a score of 85.4.
Confidence across all sectors rose, with transportation experiencing the highest gain since the end of 2020 (17.2). Information and communication technology is now the most confident sector, likely reflecting the rapid shift to online activities during the pandemic.
Most businesses continue to face the negative economic impacts of COVID-19 though, with 62% of companies reporting a decrease in sales due to the pandemic. That said, production levels are clearly improving, and a growing number of companies are now reporting positive impacts, which at 28%, is double last year’s rate. These results show that companies are adapting to new ways of work, and increasingly pivoting their production to take advantage of new demand trends.
A growing share of companies reported their orders from the United States have improved. Looking ahead, expectations for overall export sales in the next six months have returned to pre-pandemic highs, with almost three-quarters of firms (73%) forecasting gains.
“Canada’s renewed exporter confidence is clearly benefitting from the strong economic recovery south of the border,” Hall said, adding EDC expects the global economic recovery to kick into a higher gear in the second half of 2021. “The broader reopening of the U.S. is expected to play a key role in Canada’s trade recovery as American consumers start drawing on their significant savings to satisfy pent-up demand. In this phase of the economic recovery, supply may struggle to keep pace with surging demand.”
Other key highlights:
- The diversification push continues as 65% of respondents said they are planning to export to new markets and invest outside Canada. The United Kingdom and Australia are top-of-mind for those respondents.
- All business sizes expressed increased confidence, with small businesses going up the most, to 81.0, followed by medium businesses at 79.9, and large businesses at 77.7.
About EDC’s Trade Confidence Index
This survey includes responses from 612 Canadian exporters. The Trade Confidence Index is conducted twice a year, providing insights otherwise unavailable through traditional trade statistics. The results are a pulse check of Canadian exporters’ level of confidence and their expectations of international trade opportunities. Respondents to this online survey are a broadly representative mix of small, medium and large-sized companies across the country. The survey was conducted from May 5 to June 1, 2021.
