Canadian companies feeling more optimistic about economy and international trade
Exporter confidence has rebounded nearly five points, according to the mid-year release of the Trade Confidence Index (TCI) from Export Development Canada (EDC).
The index score now sits at 68.6 after three consecutive drops but remains below the historical average of 72.9 and the 69.1 score from June 2022. The rise in confidence was reflected across all Canadian regions and business sizes - though only a modest increase was tracked with medium-sized businesses.
“The biggest improvements were seen in perceptions around domestic and world economic conditions, reflecting stronger-than-expected global economic growth so far this year,” said EDC’s Chief Economist Stuart Bergman.
Confidence rose considerably across all sectors except for extractives, with the largest increase seen in the infrastructure and environment sector possibly spurred by the increased focus on clean energy initiatives by many developed market governments.
From a market perspective, while the United States remains the top exporting and investment destination, interest in the Indo-Pacific region has jumped to the second spot, with 42% of respondents exporting to the region. This is an impressive six-percentage-point jump since EDC’s December 2022 survey.
Despite the more positive outlook, respondents are still experiencing barriers on various fronts. The risks of global economic slowdown and declining sales are top among their concerns. Slightly more than half (54%) of exporters indicated their production is impacted by global supply chain issues and expect that to last longer than the next quarter. Further, 69% of respondents are reporting negative impacts related to interest rate increases, with 74% of medium-sized companies reporting the same. Continuing the trend observed since the onset of the pandemic, 37% of exporters surveyed anticipate tightening financing conditions to worsen.
Even with numerous challenges, exporters remained steady in their intention to export to new markets, with 68% of respondents planning to export to new countries. Additionally, 27% plan to invest outside Canada, up five percentage points since the last round.
Other highlights:
- 87% of respondents reported issues in accessing skilled labour, with 38% saying it’s very difficult to find the right workers and 36% feeling the pressure to increase wages.
- Hiring skilled labour has featured as a Top 5 challenge facing the Canadian exporter in every TCI survey EDC has conducted since 2021.
- Trade confidence rose across the board, with Atlantic Canada recording the largest jump.
