CICA/RBC Business Monitor (Q2 2008) shows sharp decline in corporate confidence

Boardroom optimism about the economy has plunged to 23% from 67% over the past 12 months and corporate confidence in the Canadian economy is barely registering, according to respondents in the CICA/RBC Business Monitor (Q2 2008) report, a quarterly survey of CAs in executive corporate positions across Canada conducted by the CICA.

It has been a tumultuous 12 months and that is reflected in the drop in confidence and optimism levels of the latest report. "Compared to Q2 2007, which was before the credit crunch and everything else that's gone on in the last year, they're all on the downside," said Kevin Dancey, FCA, CICA president and CEO, of the key confidence and optimism measures. "We'd love to see them back where they were."

The good news for Canadian business is that Canada is experiencing rising export prices coupled with strong domestic demand for goods and services. Some positive effects from an improving US economy are also expected by year's end.

The number of survey respondents indicating that higher energy prices are of major or moderate importance to their company climbed significantly (53% versus 39% in Q2 2007). The widespread impact of gasoline and diesel prices on companies across Canada was evident. Three in four respondents indicated their companies have had to absorb either some (49%) or all (25%) rising energy costs. However, just less than four in 10 respondents in companies facing higher energy costs said they have made operational changes in response; most frequently cited were changes in building operations, shipping/logistics/vehicle usage and general cost reductions.

"With the upward trend in energy costs, sustained energy-cost management is a key focus for all companies," said Dancey. "Well-run enterprises that both recognize the changing environment and control these expenses can achieve a competitive advantage."

The CICA/RBC Business Monitor is issued quarterly and draws upon business insights of CAs in leadership positions in privately and publicly held companies across Canada. This Q2 2008 report, which received national press coverage in both The Globe and Mail and National Post and significant regional coverage, was based on responses to e-mailed surveys completed by 443 CAs of 4,551 identified by CICA as holding senior positions (CFO, CEO and COO).

The CICA/RBC Business Monitor (Q2 2008) is part of an international initiative. The American Institute of Certified Public Accountants in the US and the Institute of Chartered Accountants in England and Wales in the UK also undertake quarterly studies that tap the insights of members in senior positions to provide a barometer of economic activity in their countries and as a basis for future comparative analysis across countries. The CICA/RBC Business Monitor (Q2 2008) is available online at www.cicarbcbusinessmonitor.com.