Conference Board Of Canada - Business Confidence Continues to Fall
Published by Conference Board of Canada. Read full article here.
The Conference Board of Canada’s Index of Business Confidence dropped 0.8 percentage points to 70.7 (2014 = 100) in October.
The Index now sits 33.9 points below its last peak in the second quarter of 2021.
Given that many firms foresee an imminent slowdown, it comes as no surprise that 58.6% of respondents now expect overall economic conditions to worsen over the next six months.
Capacity utilization rates continue to be inauspicious as more than 60% of businesses have been operating below their optimal capacity over the past year.
Artificial intelligence tools are starting to have an impact on investment decisions, Businesses continue to highlight the benefits AI has on firm-level productivity through automation and digitization.
Overall, capital investment levels are forecast to contract modestly over the next six months as the bulk of survey respondents continue to show concern in a period of ongoing economic uncertainty.
The Index of Business Confidence fell for the ninth straight quarter.
It has been over two years since the last time the Index rose, and the latest drop adds to the worst downward spell on record.
Although inflationary pressures have started to ease, various factors such as high interest rates, rising labour costs, government policies, and shortage of qualified staff are currently having detrimental effects on firms’ planned investment spending.
About 54% of survey respondents believe high-interest rates are currently having an adverse impact on their planned expenditures, a figure approximately 5 percentage points higher than the second-ranked concern involving rising labour costs.
The Bank of Canada held its benchmark interest rate at 5% in September and again in October.
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