Yet there is an optimism that 2008 will bring increased sales and profits

CALGARY, ALBERTA- T.E.C. (The Executive Committee) Ltd.: Canadian CEOs and business leaders continue to show that confidence in the Canadian economy is wavering. The fourth quarter 2007 CEO Index score, 95.6, is the lowest recorded since scoring began in the second quarter of 2003 by TEC Canada, Canada's leading chief executive development organization. The current score represents a decline of 11.7 points down from 107.3 reported in the last survey issued in September 2007.

The fourth quarter 2007 CEO Index was conducted in early December and participants consisted of one hundred and ninety of TEC Canada's CEOs and business leaders. When asked compared to a year ago whether the overall economic conditions in the Canadian economy have improved, remained the same, or worsened, 21% said economic conditions had improved, 34% said they had stayed the same, and 45% indicated they had worsened. When asked about their predictions for the next 12 months, 11% said economic conditions would be better, 50% said they would remain the same, and 39% expect economic conditions to worsen. Overall, the outlook for economic improvement in 2008 is not expected to veer too far from the current conditions.

In light of the overall expectation that the Canadian economy will remain fairly constant in 2008, 68% of the survey participants anticipate an increase in sales revenues over the next year. Only 22% indicated they anticipate sales to remain the same, with 10% anticipating a decrease. Profitability expectations show 53% of the CEOs and business leaders surveyed indicated improved profitability. 31% expect profitability to remain the same while 16% expect it to worsen. When asked about the likelihood of company fixed investment expenditures over the next 12 months, 39% expect an increase, 40% expect fixed investments to remain the same, while 21% expect a decrease in fixed investment expenditures. Despite a backdrop of faltering economic confidence, Canadian CEOs and business leaders look to the year ahead with anticipation for favourable sales and profitability.

In line with a view to increased sales and profitability, increases in staffing are also favoured in 2008. 48% of those surveyed indicated intentions to increase staff over the next 12 months, while 40% envision no change and only 12% anticipate staff reduction. Of those that intend to increase staff in 2008, the highest percentage (29%) said the increase would occur steadily over the next 12 months, 15% plan the increase in the first quarter of 2008 and 12% are intent on increasing staff in the second quarter of 2008.

For the first three quarters of 2007 staffing has consistently been the number one significant business issue. In the first quarter of 2007 staffing was reported by 46% of those surveyed. In the second quarter of 2007 staffing was reported by 43% and, in the third quarter it was reported by 44%. Interestingly, in the fourth quarter of 2007, staffing continues to take the lead, but it is down significantly, dropping to 34%. Staffing is followed by financial issues at 21%, and economic uncertainty where there has been a jump from 9% in the third quarter to 16% in the fourth. Fourth quarter results also indicated 17% of the respondents selected "other " as a response to significant business issues. The leading description under "other" identified 'appreciation of the Canadian dollar' as the most frequently expressed response making up 14 of the 32 responses. This was followed by 'exchange rates' as the second most repeated response which represented 6 of the 32 responses given. It becomes evident that a shift has occurred over the past year indicating that while staffing has maintained a top position as the number one business issue, the value of the Canadian dollar has significantly impacted the fourth quarter as a recent development in the area of significant business issues.

Tied in with the emergence of the value of the Canadian dollar as an issue were responses to how the Canadian dollar has impacted the businesses of the survey respondents. Of the respondents 19% identified themselves as importers, 33% exporters, the balance indicated they were neither. 18% indicated impact had been positive, 54% indicated a negative impact, and 28% said the strength of the Canadian dollar has not effected their particular business. When asked what the long term effect of a strengthened Canadian dollar on the economy is believed to be, the responses reflected 48% believe this will have a mild negative effect with 26% believing a strong negative effect will be felt.

The fourth quarter 2007 survey also posed questions that would provide a snapshot profile of a typical Canadian CEO. The survey found 70% of the CEOs surveyed are first born children and 45% identified the person having the most influence on them is their father. In addition, the average CEO and small business owner works 51 to 60 hours a week (58% of responses), feels that the demands cause more stress today than one year ago (61%), and the chief reasons for this include too much work to do (18%), staffing issues (17%), and financial issues (16%). The typical CEO then is a first born that has been significantly influenced by their father, works 51 to 60 hours a week and feels the pressures of workload, staff, and finance are factors greater in their lives today than they were one year ago.

As the fourth quarter of 2007 draws to a close the confidence of Canadian CEOs and business leaders shows a deep decline yet the outlook for 2008 bears a steadfast optimism that sales and profits will increase in 2008.

One hundred and ninety CEOs of small to mid-sized businesses took part in the survey and shared their views on current economic trends, issues affecting business and Canada as a whole.

TEC Confidence Index Component Questions

NOTE: All component questions are scored as the percent giving favorable replies minus the percent unfavorable plus 100. The TEC Confidence Index is the sum of the components calculated as a percentage of the level recorded in the Q2 2003 survey.

Canadian businesses with annual sales between $1 million and $900 million represent the most vital component of the nation's economy. This small to mid-size business sector creates 75 percent of all new jobs and generates 50 percent of revenue. The opinions of these business leaders provide a clear snapshot of current economic, market and industry trends and demonstrate their plans for growth over the next 12 months. These insights provide a leading indicator for employment, capital expenditure, sales and revenue trends.

The Q4 2007 TEC Confidence Index is a compilation of responses from 190 Canadian CEOs of small to mid-sized companies, surveyed Thursday, December 6, 2007 - Thursday, December 13, 2007. The TEC Confidence Index is the only comprehensive report of their opinions and projections. TEC Canada conducts the TEC Confidence Index quarterly.

See Confidence Graph