Canada's executive chartered accountants are increasingly anxious about the U.S. economy heading into a new year, according to the latest CICA Business Monitor (Q4 2012).
More than half of the executive CAs surveyed (55 per cent) believe the state of the U.S. economy represents the strongest challenge to economic growth in Canada, up sharply from 40 per cent in Q3 2012. Uncertainty about the Canadian economy (21 per cent) is next followed by the European debt crisis (7 per cent).
Almost six-in-ten respondents (56 per cent) are neutral about the prospects for the Canadian economy over the next 12 months. Thirty-one percent are optimistic compared with 34 per cent from the previous quarter. Just over one-in-ten (13%) of the respondents are pessimistic about what lies ahead for the economy.
"With our close ties to the U.S. economy, it only makes sense that there is a lot of focus stateside," says Kevin Dancey, FCPA, FCA, president and CEO, Canadian Institute of Chartered Accountants (CICA). "The fall of 2012 has featured lots of uncertainty in the United States with a presidential election and the looming fiscal cliff. Until a clearer picture emerges, the wait and see approach by Canadian executive CAs will likely continue."
Even though the executive CAs are closely watching things south of the border, they are expressing growing optimism about how their businesses will perform over the next 12 months. Business optimism among the survey respondents is up slightly, climbing to 56 per cent in Q4 2012 from 50 per cent the previous quarter. Sixty-seven per cent of the respondents expect their revenues to increase in the next year and 65 per cent are forecasting an increase in profits.
Turning to employment forecasts, 38 per cent of the respondents expect the number of employees at their companies to increase in the next year, down from 46 per cent in Q3 2012. Forty-three per cent anticipate no change and only 18 per cent expect a drop in employment numbers.
The executive CAs rank reducing costs, improving productivity and increasing domestic sales as being most important for their companies in 2013.
The CICA Business Monitor is issued quarterly, based on a survey commissioned by the CICA. The report draws upon business insights of Canadian CAs (including Quebec CPA, CA and Ontario CPA, CA members) in leadership positions in privately and publicly held companies.
For the Q4 2012 study, emailed surveys were completed by 298 of 4,377 identified by the CICA as holding senior positions (CFOs, CEOs, COOs and other senior executive roles). The response rate was seven per cent, with a margin of error associated with this type of study at ± 5.7 per cent, with a confidence level of 95 per cent. The survey was conducted by Harris/Decima Inc. from December 4 to 18, 2012. A background document is available online at www.cica.ca/businessmonitor.