Global economic turmoil has sent confidence levels among Canadian exporters tumbling to their lowest level since the recession.
Confidence has plunged from just six months ago, Export Development Canada's semi-annual survey of exporters, to be released Thursday, shows. Its trade confidence index dropped 12 per cent this fall – only the second time since 2000 it has registered that magnitude of drop.
The findings paint a picture of a sector far more uneasy about developments outside Canada's borders than within it. The biggest reason for the index's decline is the worsening sentiment over world economic conditions, while opinions on domestic sales were far less gloomy.
“Canadian exporters appear frustrated by the uncertainty in the global economy and the world’s markets, a clear and consistent message we are hearing,” said Peter Hall, the agency's chief economist. “That uncertainty makes planning for the future extremely difficult.”
Plunging confidence masks the fact that actual activity is improving, on several levels. Exports were the key driver behind Canada's 3.5-per-cent expansion in the third quarter as a number of sector bounced back from temporary disruptions. Consumer spending in the U.S. is steadily rising and factory orders from across the G20 have been growing at double digit pace since the start of the year, Mr. Hall noted.
The telephone survey with a sample size of 1,000 exporters tracks expectations in five areas – domestic sales, export sales, domestic economic conditions, global economic conditions and international business opportunities -- over the next six months. Sentiment deteriorated in all five areas.
“There seems to be a lot more concern about what’s going on in Europe, Japan and China than at home and in the U.S,” Mr. Hall said. Indeed, one in five exporters have had their trade flows impacted by the European financial crisis and Japan's earthquake.
The most upbeat industries are the extractive and resource sectors, which are benefiting from still-high commodity prices.
Canadian companies continue to diversify, albeit slowly. The U.S. is still, by far, the country's main export market, followed by the U.K., Germany, France, Japan and Australia. Meanwhile, Brazil, Russia, India, China and Mexico – or BRICM -- markets are increasingly important, especially Brazil and China, the report said.
It also found that exporters are adapting to a strong Canadian currency. More than half of exporters said they are very prepared to function with a high Canadian dollar, the fall survey showed.Report Typo/Error