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Optimism about Canadian economy rose sharply in Q1 2012

By CO Staff @canadaone |

Optimism is up, according to a CICA/RBC survey of Canadian executive chartered accountants.

Confidence numbers in the first quarter of 2012 were up both nationally and in terms of company outlook compared to the last quarter of 2011, with confidence in the Canadian economy at 32 per cent, a 12 percentage point increase from 20 per cent last year and at the company level optimism is at 57 per cent, up from 49 per cent in the last quarter of 2012.

Seventy four per cent of respondents who were optimistic about Canada's economy cited interest rates as the reason for their positive outlook.

"It is not surprising that we're seeing a rise in optimism about the Canadian economy and greater comfort with indicators stateside considering how closely our economies are linked," said Kevin Dancey, president and CEO, Canadian Institute of Chartered Accountants.  "These are positive signals, but not enough to suggest that we have achieved a sustainable recovery in Canada."

Many survey respondents expect to see employment numbers rise in their company and have positive income and profit projections for the coming year.

Overall, 65 per cent expect profits to increase and 23 per cent expect to see profits increase by more than 10 per cent.

Expectations for new hires are consistent with those from the fourth quarter of 2011, with 44 per cent of respondents expecting the number of employees at their companies to rise in the next year. Forty one per cent do not expect to see a change in employment numbers, while 25 per cent expect an increase of less than five per cent and eight per cent are expecting to see their hires increase by more than 10 per cent.

"Governments are looking at businesses to lead a resurgence in economic growth," says Andrea Bolger, head, Business Financial Services, RBC. "So it's very encouraging to hear that Canadian business leaders are optimistic, and that they're moving forward with an expectation that their performance will be stronger over the next 12 months, despite the challenging and uncertain economy."

Meanwhile just 22 per cent of respondents believe the US will slip into a recession over the next six months, which is down 40 percentage points over the last two quarters.

However, even with this improvement almost half (43 per cent) view the US economy as the biggest hurdle for growth in Canada. Eighteen per cent see Europe's economic crisis as the next biggest challenge to the growth of Canada's economy.

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