A survey of Canadian business executives by the Conference Board of Canada indicates 63 per cent of them expect economic conditions to be worse in six months while just 25 per cent believe they will improve.

The board’s April Index of Business Confidence fell 50 per cent from 86.0 to 43.8 based on survey results between March 30 and April 16. It is the lowest level since the board started the survey in 2002.

Other key findings include:

  • 68 per cent of respondents said they thought their firm’s financial position would deteriorate;
  • 79 per cent of businesses reported operating below capacity, with 51 per cent saying they were operating “substantially below” capacity; and
  • 48 per cent said it was a bad time to undertake expenditures to reduce their firm’s GHGs.

“Business sentiment had already been languishing at its lowest level since the financial crisis. From that weak starting point, the Index of Business Confidence dropped by half. With the Canadian and global economies in deep freeze as we deal with the COVID-19 outbreak, the results of the survey are hardly surprising,” said the conference board. “Very few business leaders are expecting the economy, or their firms’ fortunes, to improve in the next six months.

“The Index of Business Confidence is a reliable leading indicator of investment spending. When businesses have been pessimistic in the past, there was less spending on machinery and equipment, which has a lasting impact on the country’s potential economic growth. Of course, with the index well below its previous low, we are now in uncharted territory, and it seems likely that business investment will be exceedingly weak for the foreseeable future.

“Given this pessimism, the balance of opinion on future investment was also unsurprisingly negative. The share of respondents saying that now is a good time to invest was 18 per cent, while the share of firms viewing now as a bad time to invest was 60 per cent. Overall, 24 per cent of firms are planning to increase their spending on machinery and equipment in the next six months, while 55 per cent are planning to shrink their investments.”