Key takeaways from the Mid-Year 2018 Trade Confidence Index, including why trade-involved Canadian companies are still confident.

Mid-Year 2018 Trade Confidence Index: A Positive Outlook for the Next Six Months

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Mid-Year 2018 Trade Confidence Index:

A Positive Outlook for the Next Six Months

The mid-year 2018 Trade Confidence Index (TCI) was released on July 13, 2018.
And for Canadian businesses, the next six months are looking bright.

The TCI is a pulse check of Canadian exporters’ confidence in their domestic and international sales opportunities over the next six months. In spite of dramatic headlines and tradepolicy uncertainty, more and more Canadian businesses are exporting with confidence—so much confidence, in fact, that the TCI is the highest it’s been since 2014.*

Here are some highlights from the report:

TCI has increase from 73.5 since year-end 2017

TCI has increase from 73.5 since year-end 2017

TCI has increase from 73.5 since year-end 2017

Trade confidence at a glance

Exporters’ confidence in their sales has significantly increased.

41 to 61

believe domestic sales will increase

56 to 73

believe export sales will increase

19 to 21

believe the world economy will improve


More companies are looking to hire but reported it’s harder to find skilled labour.

37 to 50

plan to hire in next 6 months

30 to 33

access to skilled labour difficult

 

Key reasons for confidence

 

New Customers

new
customers

Increase Activity

increased
activity

Emerging Economies

emerging economies & improvements in U.S. economy

 
New Customers

new
customers

Increase Activity

increased
activity

Emerging Economies

emerging economies &
improvements in U.S. economy

 

How Trade-Confident Are You?
How does your business stack up against the TCI? Take the quiz to compare your score to other businesses in your region, sector and size.
Get it Now 

Which companies are most optimistic?

Small businesses have seen the highest confidence increase in the past 6 months—but medium- and large-sized companies are in good spirits, too.

73.6 to 73.4

Small business TCI

73.7 to 74.5

Medium business TCI

74.0 to 71.6

Large business TCI

All regions experienced an increase in confidence, with the biggest being 4.7 points in the Atlantic.

TCI by region

All sectors experienced a TCI increase since year-end 2017 with transportation, light manufacturing and information and communication technology leading the way.

TCI by market sector

What’s top of mind for exporters

This season’s upbeat sentiment may feel unexpected for some, but things have been looking up for a while. Here’s how Canadian companies feel about doing business outside Canada:

 

Stronger U.S. orders

NAFTA regenotations remain a concern

Finding opportunities abroad

The number of companies doing business outside Canada has increased over the past two years—and it doesn’t look like they’ll be stopping any time soon.

Finding opportunities abroad

 
Finding opportunities abroad
 
Finding opportunities abroad
 
Finding opportunities abroad

Canada’s main export destinations

Despite an increase in overall activity, the percentage of exporters who are currently exporting to many countries has stayed the same or decreased.
Listed below is the percentage of exporters currently exporting to these countries, with the change in brackets.

 

Canada's main export destinations

Canada's main export destination map

The Canadian economy

While many Canadians felt chilly towards the dollar at year-end 2017, businesses are accounting for the ‘new normal’.

36 to 51

The number of exporters who believe their exports will increase if the value of the dollar stays the same

Despite projected growth based on the current value of the dollar, high interest rates continue to impact Canadian exporters.


20 to 30
Exporters who indicate higher interest rates negatively impact their exports

13%

Percent of the 30% of exporters impacted who say higher interest rates cost them more and lower their profit margins

3%

Percentage of exporters who say higher interest rates make it difficult to borrow money

Canadians’ predictions about obtaining financing are polarizing

10 to 17
feel terms and conditions will improve
11 to 15
feel terms and conditions will worsen
 

Looking to the future

Exporters’ confidence may have dropped slightly, but it’s not all bad news. Canadian businesses have a lot to feel optimistic about.

59%

More companies are also looking to expand since Year-End 2017—but with less skilled labour to fill the roles.

59%

Exporting companies that indicated they plan to increase hiring in the next 6 months

59%

Exporters that indicated that getting access to skilled labour is very difficult

Canadian direct investment abroad (CDIA) is growing, with 6% more companies investing and 10% more planning to invest outside Canada since year-end 2017.

Of companies investing:

59%
established new branches

34%
established a warehouse

34%
established a plant

Overall, the grass is looking a lot greener for Canadian businesses—the greenest it’s been in 4 years. Riding a wave of stronger global trade and economic growth, companies are feeling optimistic and looking to realize new trade opportunities.

 

About the Trade Confidence Index

Conducted twice a year since 1999, our Trade Confidence Index (TCI) is a pulse check of Canadian exporters’ level of confidence and their expectations of international trade opportunities over the next six months. It is a composite score based on responses to questions regarding five elements: export sales, international business opportunities, world economic conditions, domestic sales, and domestic economic conditions.

*Note all interviews were conducted before the announcement of tariffs on steel and aluminum imports from Canada by the US administration on May 31.

Mid-Year 2018 Trade Confidence Index: A Positive Outlook for the Next Six Months was last modified: August 16th, 2018 by Export Development Canada.
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