Business confidence strong in Canada, meager elsewhere

A new survey of businessowners worldwide indicates that business optimism is on the decline at the worldwide level, with Canada remaining strong.

According to a series of reports released by Grant Thornton International, net global business sentiment has plummeted from 31 per cent in the third quarter of 2010 to just 3 per cent in the July-September quarter. Optimism fell even more precipitously in the U.S., dropping from 41 per cent to minus 2 per cent in the third quarter.

Ed Nusbaum, CEO of Grant Thornton, said the study is reflection of how tenuous businessowners consider today's financial markets, which is impacting how they feel about their companies' future performance.

"The European sovereign debt crisis is a major contributor to the lack of confidence felt in emerging economies," said Nusbaum. "Businesses are telling us they feel they have no control over how things are going to turn out. An economic outlook that appeared to be improving just three months ago has been replaced with one of total uncertainty."

This unpredictability felt by businessowners may have compelled some to reconsider their business insurance options. While these policies don't cover losses experienced as a result of the poor economy, they do provide companies with assistance should they be forced to close their doors due to a covered disaster.

Meanwhile, as some cope with the expectation that growth will be constrained, Canadian businesses are bucking the worldwide trend and expressing a great deal of optimism compared to other countries. According to the study, sentiment among Canadian businesses diminished from 80 per cent to a still-robust 60 per cent.

"In Canada, businesses remain cautious because of the uncertainty in the global economy, but relative to countries around the world, has remained remarkably optimistic in the face of uncertainty," said Bill Brushett, national client services partner for Grant Thornton.

Other positive indicators from the survey include the finding that 87 per cent of Canadian businesses anticipate increasing their employees' salaries, up from 76 per cent last year and far higher than the 64 per cent global average.

However, other polls suggest confidence levels among Canadian businesses are waning, particularly at companies that trade with foreign countries. Export Development Canada reports that its Trade Confidence Index has diminished by 12 per cent since the spring of 2011, fueled by exporters who are pessimistic about the world's markets.