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New homes under construction last month in Oshawa, Ont. (Nathan Denette/The Canadian Press)
New homes under construction last month in Oshawa, Ont. (Nathan Denette/The Canadian Press)

Economy Lab

Recession fears easing among Canadian CFOs Add to ...

Things are looking up for Canadian companies and the economy.

Canadian chief financial officers and other corporate accountants say they expect higher profits and sales. They’re also looking at more hiring, capital spending and mergers-and-acquisitions.

The main reason: greater optimism about prospects for both the Canadian and U.S. economies.

More related to this story

That’s the conclusion of two new surveys by accounting firms Deloitte Touche and the Chartered Accountants of Canada.

The surveys closely mirror the tone of recent economic data, economists forecasts and investor expectations.

While the economy is hardly booming in either Canada or the U.S., fears of a reprise of the 2008-09 recession and global financial crisis are easing. Economists expect the Canadian economy to grow at an annual rate of roughly 2 per cent in the first quarter. The consensus for the U.S. is roughly the same.

“Canadian CEOs continue to be more positive overall than U.S. CFOs, but the gap is narrowing quickly,” said Trevor Nakka of Deloitte Canada. “This increased optimism appears to be leading to greater prospects for increased investment by North American companies.”

Among the highlights of the Deloitte survey, based on a February survey of mainly large U.S. and Canadian companies, including 94 Canadian CFOs:

  • Average sales gains of 5.9 per cent
  • Profit gains of 12.8 per cent
  • 2 per cent gain in domestic employees
  • 3.5 per cent gain in R&D spending
  • 12 per cent increase in capital spending

The Chartered Accountants’ survey also shows rising optimism:

  • 44 per cent expect hiring to increase v. 15 per not hiring, and 41 per cent no change.
  • 32 per cent are optimistic about the Canadian economy (up from 20 per cent in the fourth quarter) v. 10 pessimistic.
  • 57 per cent are optimistic about their business prospects v. 49 per cent last quarter.

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