CICA Business Monitor

The Canadian Institute of Chartered Accountants (CICA) is proud to present the CICA Business Monitor. This report draws on the strategic thinking and business insight of Chartered Accountants holding key leadership positions in a wide range of Canadian organizations to provide a view of business trends and economic optimism across Canada.

Key findings from Q1 2013 Backgrounder include:

A sizable majority of executive chartered accountants surveyed (75 per cent) believe the high level of personal debt among Canadians is hurting the economy.
Fifty-five per cent of the respondents also view high debt levels as a threat to future demand for products or services at their company.

“Clearly, business leaders are uncomfortable with the high level of personal debt in the country,” says Nicholas Cheung, a director with the Canadian Institute of Chartered Accountants (CICA). “The executive CAs understand that at some point, interest rates will rise. When that happens, many Canadians could be challenged to keep up with mortgage or debt payments greatly impacting their ability to purchase goods or services.”

No consensus is emerging among the executive CAs as to whether Canadians are following the advice of the Bank of Canada Governor Mark Carney and the federal government to reduce personal debt levels. Thirty-eight per cent of respondents agree it is happening, 31 per cent disagree, 25 per cent are neutral and five per cent do not know.

Other Findings

Only 26 per cent of those surveyed in the first quarter of 2013 are optimistic about how the Canadian economy will perform over the next 12 months. That is down from 31 per cent in the final quarter of 2012 and from 34 per cent in Q3 2012. Most respondents are neutral or taking a wait and see approach (64 per cent) while 11 per cent are pessimistic about what lies ahead for the economy.
Consistent with their view of the national economy, the executive CAs surveyed are less optimistic about how their companies will perform over the next 12 months. Forty-six per cent of the respondents are optimistic compared with 56 per cent in Q4 2012.
The state of the U.S. economy (44 per cent) is mentioned by respondents most frequently as the strongest challenge to economic growth in Canada. Uncertainty surrounding the Canadian economy and consumer confidence rank second at 12 per cent. It is worth noting that just seven per cent of respondents cited the European debt crisis.
Despite the dip in company optimism, some encouraging projections are emerging. Seventy per cent of respondents expect their revenues to increase in the next year and 63 per cent are forecasting an increase in profits.
Turning to employment forecasts, 39 per cent of the respondents expect the number of employees at their companies to increase in the next year. Forty-one per cent anticipate no change and only 19 per cent expect a drop in employment numbers.
There also is good news for university and college graduates. Twenty-one per cent of the respondents anticipate that their company will increase the number of graduates hired, 59 per cent expect no change and only seven per cent are forecasting a decrease. Fourteen per cent of the respondents indicate that they do not know or that the hiring of post-secondary graduates does not apply to them.
The executive CAs ranked improving productivity, reducing costs, increasing sales domestically and employee training and skill development as being most important for their companies in 2013.

“Uncertainty both at home and south of border is reflected in the survey findings. Clearly, most of the executives are waiting for a clearer picture to emerge.”

Kevin Dancey, FCPA, FCA, president and CEO Canadian Institute of Chartered Accountants (CICA)

CICA Business Monitor is brought to you by CICA.

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