Canadian optimism rebounds after a brief dip in the last quarter
TORONTO, April 24, 2012 /CNW/ - Global business optimism increased over the last three months driven by improved revenue and demand prospects, according to the latest research from the Grant Thornton International Business Report (IBR), a quarterly survey of 3,000 businesses in 40 countries. However, despite the pick-up, businesses remain less optimistic than they were at this time last year, underscoring the fragile state of the global economic recovery.
The improvement is most apparent in the G7 economies, where business optimism rose by 28 percentage points over the past three months, climbing from -12% in Q4-2011 to 16% in Q1-2012 (that is, companies that are optimistic outnumber those that are pessimistic by sixteen percentage points). The increase in optimism in the United States, where optimism increased by 45 percentage points, from just 1% in Q4-2011 to 46% in Q1-2012, is a major factor. Meanwhile, businesses in Japan (-53%) and Europe (-4%) remain pessimistic, though both have seen improvements over the last quarter.
Numbers from the past 12 months tell a more sobering story. This time last year, optimism in the G7 economies stood at 27%, 11 percentage points higher than the Q1-2012 figure. Indeed, only in Japan and the United States have levels of business optimism recovered to where they were in Q1-2011.
In Canada, optimism increased to 51%, up five points over last quarter, when it dipped to 46%. Nevertheless, it has not rebounded to the high of 80% seen in the second quarter of 2011.
"It's definitely encouraging to see that the outlook of many businesses has improved over the past three months, particularly in Canada. However, reflecting on the last year or so, and in particular the results from this time last year, we can see how much global growth prospects remain delicately balanced and how difficult the last twelve months have been around the world," says Bill Brushett, National Client Services Leader, Grant Thornton LLP in Canada.
The IBR data also reveal that businesses in mature markets are much more positive about growing their business over the next 12 months. Business expectations for increasing revenues (up nine percentage points) and profits (up eight) in the G7 have grown robustly over the past quarter, while 8% fewer businesses are citing a lack of demand as a constraint on growth. There are also signs of increasing business investment across the G7 with 6% more businesses expecting to boost plant and machinery, and 3% more planning investment in new buildings.
In Canada, 57% expect to see revenues increase (up 8% over last quarter), but only 18% expect to invest in research and development. Further, a lack of skilled workers continues to be the biggest constraint to growth, cited by 38% of businesses in Canada.
Brushett continues: "It's great to see that Canadian business have reversed the dip in optimism, but in order to continue to grow, Canada needs to focus on core areas such as access to a skilled workforce and long-term investment in R&D. Seeing momentum build in the recovery in the United States, borne out by brighter GDP and employment data, bodes well for our economy, particularly in manufacturing and distribution."
When global numbers are looked at by group or region, the improving situation in the G7 has seen the global business optimism average rise to 19% this quarter, up from 0% three months previously. Developing economies are also more optimistic: the BRIC average rose from 34% to 41%, the ASEAN average from 0% to 27% and the Latin America average from 61% to 73%.
"Signs of improvement in mature economies are clearly having a knock-on effect in emerging markets. Economies such as the BRICs, Mexico and Turkey are playing an increasingly important role in global growth prospects. But as they integrate further into the global economy, their businesses are becoming more reliant on the health of mature markets," adds Ed Nusbaum, CEO of Grant Thornton International Ltd. "For me, the key takeaway from these results is that both emerging and mature markets seem to be pulling in the same direction, which can only bode well for the global recovery."
Notes to editors
The Grant Thornton International Business Report (IBR) provides insight into the views and expectations of over 11,500 businesses per year across 40 economies. This unique survey draws upon 20 years of trend data for most European participants and nine years for many non-European economies. For more information, please visit: www.internationalbusinessreport.com.
The research is carried out primarily by telephone interview lasting approximately 15 minutes with the exception of Japan (postal), Philippines and Armenia (face to face), mainland China and India (mixture of face-to-face and telephone) where cultural differences dictate a tailored approach. Telephone interviews enable Grant Thornton International to conduct the exact number of recommended interviews and to be certain that the most appropriate individuals are interviewed in an organisation which meets the profile criteria.
Data collection is managed by Grant Thornton International's core research partner - Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire.
IBR is a survey of both listed and privately held businesses. The data for this release are drawn from interviews with 3,000 businesses globally conducted in January and February 2012.
The target respondents are chief executive officers, managing directors, chairmen or other senior executives (title dependent on what is most appropriate for the individual country) from 40 economies primarily across five sectors: manufacturing (25 per cent), services (25 per cent), retail (15 per cent) and construction (10 per cent) with the remaining 25 per cent spread across all sectors.
Locally, the sample tends to cover the sectors mentioned previously, with some countries being able to have local valid data for specific sectors or regions when the sample size is large enough.
|Group/region||Economies included in IBR|
|Asia-Pacific (APAC)||Australia, Hong Kong, India, Japan, China (mainland), Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, Vietnam|
|Association of Southeast Asian Nations (ASEAN)||Malaysia, Philippines, Singapore, Thailand, Vietnam|
|BRIC||Brazil, Russia, India, China (mainland)|
|European Union (EU)||Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Poland, Spain, Sweden, United Kingdom|
|G7|| Canada, France, Germany, Italy, Japan, United Kingdom,
United States of America
|Latin America||Argentina, Brazil, Chile, Mexico, Peru|
|Nordic||Denmark, Finland, Sweden|
|North America||Canada, United States of America|
|Other||Armenia, Botswana, Georgia, South Africa, Switzerland, Turkey, United Arab Emirates|
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Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms. These firms provide assurance, tax and specialist business advice to privately held businesses and public interest entities. Services are delivered independently by the member and correspondent firms within Grant Thornton International, a non-practicing, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. Grant Thornton International does not deliver services in its own name or otherwise. Grant Thornton International and the member firms are not a worldwide partnership.
About Grant Thornton in Canada
Grant Thornton LLP is a leading Canadian accounting and advisory firm providing audit, tax and advisory services to private and public organizations. Together with the Quebec firm Raymond Chabot Grant Thornton LLP, Grant Thornton in Canada has approximately 4,000 people in offices across Canada. Grant Thornton LLP is a Canadian member of Grant Thornton International Ltd, whose member firms operate in close to 100 countries worldwide.
Image with caption: "International Business Report shows change in business confidence in mature economies. This chart compares changes over the past three months with changes over the past 12 months. (CNW Group/Grant Thornton LLP)". Image available at: http://photos.newswire.ca/images/download/20120424_C8237_PHOTO_EN_12610.jpg
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