ABOUT TEC CANADA’S CEO CONFIDENCE INDEX
Each quarter, TEC Canada surveys members who are CEOs, KEY Executives, and business owners of predominantly small-to-medium enterprises with employees primarily between 50 to 500 and annual revenue of between $1 million to $500 million. The results are then analyzed by Dr. Peter Andersen, the former assistant chief of the Bank of Canada’s research department.
WHY IT MATTERS
By measuring the real-time pulse and sentiments of these Canadian business leaders, TEC Canada’s CEO Confidence Index provides a data-driven overview of the existing economic, market and sector developments and serves as an early indicator of trends in employment, capital spending, sales, earnings, and profit expectations across the country. This can help you anticipate turning points in economic activity and be leveraged to make informed decisions about your business’s future. With TEC Canada’s CEO Confidence Index, you’ll have a clear picture of the business landscape and be better prepared to navigate whatever comes your way.
Unlike other business outlook surveys that only include the largest firms in Canada, our CEO Confidence Index digs deep into what is happening in various provinces, revealing regional trends and providing a unique insight into the challenges and opportunities that matter most to our members.
“TEC Canada member companies are putting a high priority on technology as a defensive business strategy. With 70% saying that they are already investing in technology, and an additional 15% saying that they intend to do so.” – Dr. Peter Andersen
The cost and the availability of credit are important items on the worry list. A majority of TEC CEOs & Executives (52%) report that interest rates are having a negative impact on their business. The survey also shows that any further rate increases, from current levels, would increase this to 85%.
As in the previous survey, interest rates are viewed by TEC Leaders as the key trigger factor that could cause a recession. Also, the international banking crisis is making banks more cautious lenders everywhere. Apart from actual interest rates, there is also a credit crunch risk. Lending standards are important for small and medium-sized businesses. The terms and conditions that TEC members are facing have tightened.
The 12-month outlook for profitability has remained remarkably stable, despite the recession risk. A sizeable percentage (38%) still expects that their firms’ profitability will improve. However, the majority (60%) are more pessimistic and expect profitability to be flat to down.
TEC member companies are putting a high priority on technology as a defensive business strategy. Our current survey has a new question, which asks if investments are being made in technology to offset the labour/productivity burdens that are being faced. The response from 85% of our survey is positive, with 70% saying that they are already investing in technology, and an additional 15% saying that they intend to do so.
Our survey shows one-year-ahead inflation expectations of TEC CEOs & Executives. They continue to be well above the Bank of Canada’s 2% inflation target. Only 10% of those surveyed expect inflation to be lower than 4% a year from now and 27% see it in the 4% range. The remaining 65% expect it to be higher than 4%. If these expectations were to materialize, the Bank of Canada would be forced to continue to increase interest rates.
With TEC member inflation expectations this high, it is not surprising that a high percentage (61%) expect the prices of their own products or services will continue to increase over the next 12 months. Only 5% expect them to decline. This belief in pricing power is one of the reasons why the majority (51%) anticipate that their firms’ sales revenues will increase over the next 12 months.
Member firms still have medium-term expansion plans. Only 19% intend to reduce fixed investment expenditure during the next 12 months. Most report that it will remain the same (41%) and a relatively high percentage (37%) plan to increase total fixed investment
Don’t miss out on the opportunity to gain a wealth of knowledge from our comprehensive report, which not only delves even deeper into valuable insights regarding Recession Risk & Employment but also presents a timely Economic Outlook. Download it here.
Numbers Across the Border
The recent banking crisis in the United States has broad-sweeping implications for American and Canadian small businesses.
Financial shockwaves are being felt across borders, with elevated inflation and interest rates. To broaden our analysis and provide a look into both the similarities and differences in reactions to recent financial turbulence, we have synthesized data from WSJ & Vistage’s most recent Small Business CEO Confidence Index and compared it to TEC Canada’s results.
Here is how TEC and Vistage CEOs have been impacted.
Questions to Consider