Exporters see higher international sales despite concerns about global economic conditions
Ottawa - Canadian exporters remain optimistic they will be able to increase their export sales over the next six months, even though more than a quarter of them believe that world economic conditions will worsen during the same period, according to the latest Trade Confidence Index (TCI) from Export Development Canada (EDC).
The TCI is a semi-annual survey that examines the attitudes of Canadian exporters as they forecast the business environment over the next six months through five index elements: trade opportunities, export sales, domestic sales, and both domestic and global economic conditions.
The survey found overall trade confidence fell for the third survey in a row from 75.1 in the spring to 72.8 in late fall but remained in line with average confidence levels for the past 10 years. The decline in confidence was mainly due to Canadian exporters having a less positive outlook for international business opportunities and domestic sales, along with weaker confidence in world economic conditions.
"Even though there was a marked increase in net pessimism about key emerging markets such as China and Brazil, exporters continue to see opportunities in developed markets, particularly the United States," said Peter Hall, Vice President and Chief Economist, EDC. "The continuing recovery in the American economy, combined with a weaker Canadian dollar, is a large part of why nearly two-thirds of exporters expect their international sales to increase over the next six months."
The United States continues to be the top market for Canadian exporters, with 84 per cent of those surveyed selling goods or services there, and nearly half of them reporting increased sales since the spring. One in five exporters say the lower Canadian dollar helps their business as it allows them to offer their products at a lower price.
Despite this, trade confidence declined for companies of all sizes. Small exporters recorded the largest decrease, moving from 75.9 to 72.8. Confidence was also down across all industry sectors, led by transportation down from 75.9 to 69.2 driven primarily by worsening outlooks on domestic and global economic conditions. Most regions in Canada also expressed lower confidence. The biggest decline was found in Quebec, which went from 77.2 to 71.6, matching the West with the lowest confidence level.
"Given the global economic situation, it's understandable that confidence has slipped somewhat," said Hall. "But it is very encouraging that more than half of current exporters still say they're planning to sell into new markets over the next two years."
Hall says another positive finding in the survey is that export intensity increased over the past six months, with 45 per cent of companies indicating that more than half of their total sales take place outside of Canada, up from 42 per cent six months ago.
Some other key findings of the survey include:
• 62 per cent of Canadian exporters believe their international sales will increase over the next six months;
• 82 per cent of Canadian exporters who currently do business in Europe say their sales there have remained the same or increased over the past six months;
• 38 per cent of companies began exporting to new countries within the past two years;
• 25 per cent of companies are planning to make investments outside of Canada; and
• 42 per cent of survey respondents expect domestic sales to increase in the next six months (down from 48 per cent in spring 2015).