Canadian business optimism falls in fourth quarter, but Canada remains
among the most optimistic countries in the world
TORONTO, Jan. 27, 2012 /CNW/ - Global business confidence is balancing
on a knife edge heading into 2012 according to new figures from Grant
Thornton International. The fourth quarter results of the International
Business Report (IBR) shows the global economic outlook is still
dominated by the crisis in the eurozone, and fears are increasing that
business growth will become even more difficult than in 2011.
The latest research shows that global business optimism in the fourth
quarter of 2011 stands at net 0%, indicating a balance between those
business leaders feeling optimistic about their economies in 2012 and
those feeling pessimistic. It represents a further deterioration from
3% in Q3 2011 and 31% in Q2 2011.
Canada, which stood out in the third quarter by posting net business
optimism of 60%, saw this fall to 46% in the fourth quarter. Though not
immune from the global slowdown, Canada is still significantly above
the global average, and alongside Germany, is the most optimistic
mature economy. Canada is also one of the few major economies that
plans to raise wages above inflation, ranked third behind India and
Australia.
Optimism levels in the BRIC economies (up from 25% to 34%) and the
United States (up from -1% to 2%) have shown improvement over the last
quarter. However, at the global level, this has been offset by a large
drop in Europe where optimism fell from 0% to -17% in Q4. Within the
Eurozone, optimism plummeted from 2% to -16%.
Ed Nusbaum, CEO of Grant Thornton International , said: "Heading into
2012, we're seeing a polarization of business confidence between Europe
and the rest of the world. However, the threat of total meltdown in the
eurozone means business leaders remain uncertain about the year
ahead—they simply do not know how things will turn out. That
uncertainty is sapping confidence and choking business growth
prospects."
The research also suggests that global trade is suffering. Having risen
by ten percentage points in Q3, the proportion of businesses citing a
shortage of orders rose again in Q4, up five percentage points to 37%
globally. This result was largely driven by an increase of nine
percentage points across the Eurozone, but businesses in North America
(up seven) and the BRICs (up four) are also suffering.
Just 13% of businesses in Canada cite a shortage of orders/reduced
demand as a constraint on growth in 2012, as compared with 31% in the
US and 37% globally. However, a lack of skilled workers is a hot topic
in Canada—42% cite this as a growth constraint in 2012, much higher
than in the US (18%) or globally (28%).
In addition, business expectation for increasing revenues and profits
fell by two percentage points globally over the last quarter. In
Canada, profitability expectations for 2012 are down, dropping from 52%
in Q3 to 29% this quarter; revenue expectations dropped from 50% to
36%. Profitability expectations are also down significantly in the EU
(down 12 percentage points to 13%), but also in Latin America (down 16
to 47%) and in the ASEAN region (down 24 to 33%).
Away from the economic gloom, the results from the United States provide
a welcome and encouraging bright spot in the research. Expectations for
increasing revenue and profits in the world's largest economy in 2012
are both up by seven percentage points, to stand at 48% and 40%
respectively. Further, net 35% of US businesses plan to hire workers
over the next 12 months, up from just 17% in Q3.
"Canadian business confidence is one of the highest among major
economies around the world. Although it has dipped this past quarter,
it is still well ahead of the US, even with their modest rise in
confidence in the same time period," says Bill Brushett, National
Clients and Services Partner, Grant Thornton LLP in Canada. "We believe
the time is right for Canadian businesses to take full advantage of
this optimism and the opportunities that exist in many developing
economies. Hopefully, Canadian businesses will see the term 'global
expansion' in a whole new light—one that shines beyond our neighbour to
the south."
In addition to releasing figures for the fourth quarter, Grant Thornton
International has also published a summary of global research conducted
in 2011. To read the full report, visit www.internationalbusinessreport.com.
Bill Brushett, National Clients and Services Partner in Canada, is
available for interviews. To view a video of Bill discussing recent IBR
results and what they mean for Canada, visit: http://www.youtube.com/watch?v=j-8BZJNU0NU&feature=player_embedded
Notes to editors
The Grant Thornton International Business Report (IBR) provides insight
into the views and expectations of over 11,500 businesses per year
across 40 economies. This unique survey draws upon 20 years of trend
data for most European participants and nine years for many
non-European economies. For more information, please visit: www.internationalbusinessreport.com.
Data collection
The research is carried out primarily by telephone interview lasting
approximately 15 minutes with the exception of Japan (postal),
Philippines and Armenia (face to face), mainland China and India
(mixture of face-to-face and telephone) where cultural differences
dictate a tailored approach. Telephone interviews enable Grant Thornton
International to conduct the exact number of recommended interviews and
to be certain that the most appropriate individuals are interviewed in
an organisation which meets the profile criteria.
Data collection is managed by Grant Thornton International's core
research partner - Experian. Questionnaires are translated into local
languages with each participating country having the option to ask a
small number of country specific questions in addition to the core
questionnaire. From 2011, fieldwork takes place on a quarterly basis
every quarter with fieldwork lasting approximately one month and a
half.
Sample
IBR is a survey of both listed and privately held businesses. The data
for this release are drawn from interviews with 2,800 businesses across
the globe conducted in November/December 2011.
The target respondents are chief executive officers, managing directors,
chairmen or other senior executives (title dependent on what is most
appropriate for the individual country) from 40 economies primarily
across five sectors: manufacturing (25 per cent), services (25 per
cent), retail (15 per cent) and construction (10 per cent) with the
remaining 25 per cent spread across all sectors.
Locally, the sample tends to cover the sectors mentioned previously,
with some countries being able to have local valid data for specific
sectors or regions when the sample size is large enough.
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Thornton International Ltd.
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Image with caption: "IBR optimism survey country ranking. (CNW Group/Grant Thornton LLP)". Image available at: http://photos.newswire.ca/images/download/20120127_C7186_PHOTO_EN_9323.jpg