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Increasingly optimistic CFOs say they’re set to ramp up hiring

People line up to register for a job fair at the Metro Toronto Convention Centre, 2012.

J.P. MOCZULSKI/The Globe and Mail

Canadian companies plan to hire and spend more in the coming months amid rising optimism about the state of the economy, according to Deloitte's latest survey of chief financial officers.

Net optimism – the difference between positive and negative responses – jumped to plus-39 in Canada, up from readings of plus-seven in the first quarter and negative-six in the final quarter of last year, according to Deloitte's second-quarter CFO Signals survey.

It marked the first time in the survey's three-year history that optimism is up in back-to-back quarters.

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A separate survey conducted by American Express shows that nearly one-third of Canadian CFOs plan to increase spending and investment by at least 10 per cent this year.

The most significant factor propping up confidence is the absence of a new crisis to threaten the economy, said Bill Cunningham, co-lead of the CFO program at Deloitte Canada.

"At the end of the day, nothing has happened to undermine that confidence," he said.

There has been another quarter of economic stability in North America, sales and profits are rising, and the European debt crisis has not worsened, he pointed out.

Over all, nearly 60 per cent of the more than 100 Canadian, U.S. and Mexican CFOs surveyed expressed rising optimism, compared with just 13 per cent who are pessimistic – the lowest percentage in the three years Deloitte has been doing the survey.

A majority of CFOs now expect the economy to be in much better shape a year from now. They also anticipate raising dividends and spending more of their cash piles.

In Canada, capital spending intentions have shifted to positive from negative in the first quarter.

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"Companies remain on an offensive footing. They are looking for ways to deploy their cash," Mr. Cunningham said.

And yet CFO expectations for sales and profits are slightly lower than in the first quarter.

"We may be seeing a little more of reality setting in," he added. "Companies are still getting their heads around what is the new normal."

And while CFOs are confident about prospects for North America and China, they remain down on Europe.

Business leaders also remain generally cautious and conservative.

"Even though their appetite for risk and growth is increasing, companies' approaches will be … measured and methodical," the survey found.

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Capital spending and hiring intentions remain below the long-term survey average, Deloitte said.

CFOs also remain intensely focused on protecting profits and managing risk.

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More


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