OTTAWA, January 17, 2007 -- Confidence levels among Canadian exporters remain low, rising marginally as they expect a moderation in the value of the Canadian dollar and commodities according to the semi-annual Trade Confidence Index (TCI) survey from Export Development Canada (EDC). The fall 2006 overall index rose to 71.4 out of a possible 100 points, up from 70.7 in the spring of 2006 and nearing the 71.7 in the fall of 2005.
"The TCI survey is suggesting that Canadian exporters, although stressed, feel that prospects will improve and that the Canadian dollar has peaked," said Peter Hall, Vice-President and Deputy Chief Economist. "Given the importance that exporters have attached to the Canadian dollar in this survey, any decline in its value should be a welcome relief compared to previous fears."
The TCI survey results suggest that Canadian exporters are more optimistic about their own trade prospects than they are about the macro-level domestic or global economies. Expectations for growth in Canadian international trade opportunities, as well as foreign sales, improved significantly. In contrast, expectations about improvements in domestic economic conditions declined significantly while views on global economic conditions worsened from an already low level.
The biggest change in exporters' attitudes related to the value of the Canadian dollar against the U.S. dollar. Less than a quarter of respondents now believe that the Canadian dollar will increase in value in the coming 6 months, compared to an overwhelming 63 per cent in the spring of 2006. Two-thirds of exporters report that the value of the dollar is critical to their ability to compete in foreign markets. A declining Canadian dollar could help increase the profit margins of Canadian goods and services when selling abroad.
"Canadian exporters are coming to grips with the adverse economic conditions they have faced in recent years. The survey clearly shows that far fewer are simply riding out the storm or taking temporary measures," continued Mr. Hall. "This is a strong argument when we see that exporters expect that individually they will fare better in the coming 6 months while overall conditions remain poor."
When comparing the optimism of different sectors, light manufacturing exporters expressed the most confidence for increased business in the next 6 months. The information and communications technology sector also expects its momentum to continue as global investments are made in productivity-enhancing technology and in communications infrastructure to support internet-based services. Among the more guarded exporters in their outlook for the next fiscal half were infrastructure, transportation and resources (including oil and gas), with the latter expecting continued pricing declines.
Across Canada, there were mixed results in confidence levels. Atlantic Canada's confidence rose by 3 per cent owing to gains in energy, ore and industrial goods exports in Newfoundland-Labrador and New Brunswick. Confidence rose by 1 per cent in Ontario, slightly buoyed by the light manufacturing and information/communication technology sectors. Quebec's confidence level remained unchanged, consistent with anticipated slowing in sectors like industrial goods, consumer goods, agri-food, regional jets and forestry. Western Canada also maintained its confidence level, with the measure including gains in industrial goods and agri-food and anticipated drop in energy prices.
The TCI is a composite score based upon responses from Canadian exporters to 5 questions that measure increases or decreases in optimism on future global and domestic sales, economic conditions and trade opportunities for the next 6 months.
Opinion Search Inc. conducted the survey in late November 2006. A total of 1,000 Canadian businesses participated, and the TCI was calculated on a total of 841 respondents. The survey results are considered accurate to +/- 3.4 per cent, 19 times out of 20.
For more information about EDC and the Trade Confidence Index, click here.
Export Development Canada (EDC) is Canada's export credit agency, offering innovative commercial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining and is a recognized leader in financial reporting, economic analysis and human resource management.
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Media contact: Phil TaylorEDC Public Affairs (613) 598-2904 ptaylor@edc.ca
