Executive CAs believe Canadian recession unlikely even with sharp drop in economic optimism: CICA/RBC Business Monitor

TORONTO, Nov. 4, 2011 /CNW/ - The latest CICA/RBC Business Monitor finds that despite increased pessimism about the Canadian economy among executive CAs, only 27 per cent predict that Canada will slip into a recession within the next six months.

Optimism about the national economy for the next 12 months is down sharply among the respondents plummeting to 16 per cent in the third quarter of 2011 compared with 43 per cent the previous quarter.

"Pessimism jumped by 20 per cent when compared with the previous quarter but it is too soon to tell if this sentiment is an emerging trend," said Kevin Dancey, FCA, president and CEO, Canadian Institute of Chartered Accountants (CICA).   "While many executive CAs are expressing a more pessimistic viewpoint, the majority of respondents were actually neutral about the economy with 57 per cent essentially taking a wait and see approach."

Executive CAs, however, are less optimistic about our neighbours to the south, with 62 per cent saying the U.S. is heading for a recession within the next six months. While 62 per cent of respondents believe their businesses are prepared for a recession in Canada, 71 per cent feel a U.S. recession would have a negative impact on their company.  Fifty-seven per cent say that the state of the American economy will represent the strongest challenge to the growth of the Canadian economy.

Those surveyed also are less buoyant about how their own company will perform over the next 12 months when compared with the previous quarter.  Business optimism now sits at 48 per cent -- a 15 per cent decline from Q2 and an eight percent drop when compared to the third quarter of 2010.

"Canadian CAs appear to be taking proactive measures to prepare their companies in the event of another recession," said Andrea Bolger, head, Business Financial Services, RBC. "Many are improving efficiencies of scale and building their cash reserves to avert any possible risks."

While revenue, profit and employee number projections dipped in Q3, the forecasts for the next 12 months remain positive.


  • 63 per cent of respondents expect that their revenues will increase, down from 78 per cent last quarter. Forty one per cent expect revenues to increase by 5 per cent or more.


  • 57 per cent of respondents expect that their profits will increase, down from 69 per cent last quarter. Thirty four per cent expect profits to rise by 5 per cent or more.

Employee numbers

  • 41 per cent of respondents expect the number of employees to increase at their companies, down 10 per cent from Q2.   Eighteen per cent expect to increase their employee count by five per cent or more, but 42 per cent of respondents do not anticipate any changes.

The CICA/RBC Business Monitor is issued quarterly, based on a survey commissioned by the CICA. The report draws upon business insights of CAs in leadership positions in privately and publicly held companies across Canada.

For the Q3 2011 study, emailed surveys were completed by 380 CAs of 4,300 identified by the CICA as holding senior positions (CFOs, CEOs and COOs). The response rate was 9 per cent, with a margin of error associated with this type of study at ± 5.0 per cent, with a confidence level of 95 per cent. The survey was conducted by Harris/Decima from September 13 to 30, 2011.  A background document is available online at www.cicarbcbusinessmonitor.com.

About CICA
Chartered Accountants (CAs) are Canada's most valued, internationally recognized profession of leaders in senior management, advisory, financial, tax and assurance roles. Through their integrity, expertise, and internationally recognized qualification standards, Canada's 78,000 CAs sustain their influence and leadership position both in Canada and globally. As trusted business advisors to Canadian organizations of all sizes, Canada's CAs foster confidence in Canadian business and contribute to the health and sustainability of Canada's capital markets and economy. The Canadian Institute of Chartered Accountants (CICA) represents Canada's CA profession both nationally and internationally. The CICA is a founding member of the International Federation of Accountants (IFAC) and the Global Accounting Alliance (GAA).

About RBC
RBC delivers a wide range of financial services through a variety of channels to individuals, small and medium-sized businesses and commercial clients, including deposit accounts, investments and mutual funds, credit and debit cards, business and personal loans, and residential and commercial mortgages. It is the personal and commercial banking division of Royal Bank of Canada (RY on TSX and NYSE).

SOURCE Canadian Institute of Chartered Accountants

For further information:

Interviews with an official from the CICA can be arranged by contacting:  
Tobin Lambie, CICA, (416) 204-3228 or tobin.lambie@cica.ca

Interviews can be arranged with an official from RBC by contacting: 
Margie McNeil, (416) 388-3697 or margie.mcneil@rbc.com; or Elyse Lalonde, (416) 974-8810 or elyse.lalonde@rbc.com

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Canadian Institute of Chartered Accountants

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