Mid-Year 2018 Trade Confidence Index: A Positive Outlook for the Next Six Months
The mid-year 2018 Trade Confidence Index (TCI) was released on July 13, 2018. And for Canadian businesses, the next six months are looking bright.
The TCI is a pulse check of Canadian exporters’ confidence in their domestic and international sales opportunities over the next six months. In spite of dramatic headlines and tradepolicy uncertainty, more and more Canadian businesses are exporting with confidence—so much confidence, in fact, that the TCI is the highest it’s been since 2014.*
Here are some highlights from the report:
Trade confidence at a glance
Exporters’ confidence in their sales has significantly increased.
believe domestic sales will increase
believe export sales will increase
believe the world economy will improve
More companies are looking to hire but reported it’s harder to find skilled labour.
plan to hire in next 6 months
access to skilled labour difficult
Key reasons for confidence
- new customers
- increased activity
- emerging economies & improvements in U.S. economy
Which companies are most optimistic?
Small businesses have seen the highest confidence increase in the past 6 months—but medium- and large-sized companies are in good spirits, too.
All regions experienced an increase in confidence, with the biggest being 4.7 points in the Atlantic.
All sectors experienced a TCI increase since year-end 2017 with transportation, light manufacturing and information and communication technology leading the way.
What’s top of mind for exporters
This season’s upbeat sentiment may feel unexpected for some, but things have been looking up for a while. Here’s how Canadian companies feel about doing business outside Canada:
Finding opportunities abroad
The number of companies doing business outside Canada has increased over the past two years—and it doesn’t look like they’ll be stopping any time soon.
Canada’s main export destinations
Despite an increase in overall activity, the percentage of exporters who are currently exporting to many countries has stayed the same or decreased.
While many Canadians felt chilly towards the dollar at year-end 2017, businesses are accounting for the ‘new normal’.
The number of exporters who believe their exports will increase if the value of the dollar stays the same
Despite projected growth based on the current value of the dollar, high interest rates continue to impact Canadian exporters.
Exporters who indicate higher interest rates negatively impact their exports
Percent of the 30% of exporters impacted who say higher interest rates cost them more and lower their profit margins
Percentage of exporters who say higher interest rates make it difficult to borrow money
Canadians’ predictions about obtaining financing are polarizing
feel terms and conditions will improve
feel terms and conditions will worsen
Exporters’ confidence may have dropped slightly, but it’s not all bad news. Canadian businesses have a lot to feel optimistic about.
More companies are also looking to expand since Year-End 2017—but with less skilled labour to fill the roles.
Exporting companies that indicated they plan to increase hiring in the next 6 months
Exporters that indicated that getting access to skilled labour is very difficult
Overall, the grass is looking a lot greener for Canadian businesses—the greenest it’s been in 4 years. Riding a wave of stronger global trade and economic growth, companies are feeling optimistic and looking to realize new trade opportunities.
Canadian direct investment abroad (CDIA) is growing, with 6% more companies investing and 10% more planning to invest outside Canada since year-end 2017.
Of companies investing:
About the Trade Confidence Index
Conducted twice a year since 1999, our Trade Confidence Index (TCI) is a pulse check of Canadian exporters’ level of confidence and their expectations of international trade opportunities over the next six months. It is a composite score based on responses to questions regarding five elements: export sales, international business opportunities, world economic conditions, domestic sales, and domestic economic conditions.
*Note all interviews were conducted before the announcement of tariffs on steel and aluminum imports from Canada by the US administration on May 31.
