(OTTAWA) – June 17, 2009 – Canadian exporter confidence rebounded in the spring from an unusually depressed level six months ago, the largest single increase since the post-9/11 period in Export Development Canada's (EDC) semi-annual Trade Confidence Index (TCI).
“The jump in confidence is needed relief. The market mayhem last fall deepened what was already a serious loss of confidence,” said Peter Hall, Vice-president and Chief Economist of EDC. “The current gain is impressive, but it has only lifted confidence marginally ahead of the 9/11 low point.”
The spring result interrupted a three-period tumble dating back to the fall of 2007, with each successive drop setting a new record low level.
The overall index jumped to 68.5 from a record low of 61 in the past 6 months. The survey examines the attitudes of Canadian exporters through five index elements: trade opportunities, export sales, domestic sales, and both domestic and global economic conditions.
Key to the jump in the overall TCI is a sense that both global and domestic economic conditions will improve. About one-quarter of respondents see brighter near-term prospects, up sharply from the previous survey. There was an even more dramatic change in the share of those expecting worse conditions. From a clear majority in the past survey, the pessimists shrunk back to about a quarter of total respondents.
Although the TCI is among a handful of economic indicators that are up, exporters are decidedly less optimistic about customer demand. Their outlook for domestic and export sales remains dim and is largely unchanged from the fall of 2008, which witnessed the most pessimistic sales outlook over the TCI's history.
The dollar forecast indicator continues to be the most volatile issue in the survey. “The recent sharp increase in the Canadian dollar came as a surprise to most, two-thirds of exporters expected a stable or declining dollar.”
The preferred currency strategy is to simply ride out the dollar's ups and downs. Fewer intended to make structural changes to accommodate the dollar. A small but rising share is relying on hedging as a shield against possible currency shifts.
Despite the economic turbulence and uncertainty facing exporters, the survey suggests that they still believe trade opportunities are present. One-third of respondents, about average for the past 7 years, expect trade opportunities to improve in the near-term.
The transportation and infrastructure/environment sectors experienced the greatest increase in their TCI scores from the fall of 2008. The near term positive outlook for the transportation sector could reflect the bailout announcements and support for the auto parts suppliers during the survey period. On the infrastructure side, many countries have initiated stimulus packages to address the global downturn with significant infrastructure components.
Exporters experiencing the least optimism are those in the extractive sector, largely related to plummeting prices from their historical highs in 2008. Prices are expected to remain low in 2009. According to Statistics Canada, energy exports have lost nearly half of their value over the last two quarters and EDC is forecasting a 41 per cent decline in exports for this sector in 2009.
Regionally, Western Canada posted the most optimistic score of 71 (up from 63 in the fall of 2008), followed closely by Ontario at 69 (up from 60), Atlantic Canada at 67 (up from 58) and Quebec at 66 (up from 62).
Opinion Search Inc. conducted the survey in late April and early May of 2009. A total of 1000 Canadian businesses participated, and the TCI was calculated on a total of 858 respondents. The survey results are considered accurate to +/- 3.1 per cent, 19 times out of 20.
For more information about EDC and the Trade Confidence Index, visit www.edc.ca/english/docs/ereports/tradeconfidence/country_information_index_e.htm .
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 more than 8,300 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financially self-sustaining, a recognized leader in financial reporting and economic analysis, and has been recognized as one of Canada's Top 100 Employers for eight consecutive years.
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Media contact:
Phil Taylor
Export Development Canada
Tel: (613) 598-2904
Blackberry: ptaylor@edc.ca
