Business sentiment of American subsidiaries in Canada is the lowest in more than two years amid heightened concerns the nation won’t be immune to a global economic slowdown.
In a survey by Nanos Research for the American Chamber of Commerce, top executives of these subsidiaries reported a weakening sales picture in Canada since the end of last year, a drop in hiring intentions and a deteriorating outlook for the economy. For example, none of the executives surveyed said the Canadian economy will strengthen over the next six months.
October’s results are consistent with misgivings about the current outlook for the global economy. Lingering trade tensions between the U.S. and China, uncertainty over the ratification of the new North American Free Trade Agreement and concern about fall-out from Brexit are likely contributing to weaker business sentiment worldwide.
“That basically has a knock on effect,” Nik Nanos, chairman of Nanos Research, said in a phone interview. “They know that Canada is a trading country, that we are not immune from global shocks and any shock that might happen globally will have a materially negative impact on Canada.”
A composite indicator of U.S. investment in Canada derived from the questions fell to 42, the lowest score since Nanos began the survey in 2017. The current poll consisted of interviews with executives from 37 U.S. businesses operating in Canada.
Even though the firms foresee weaker business conditions in the coming months, the outlook remains net positive. The businesses are more likely to expect increases in sales and hiring rather than decreases. Nor has the domestic business environment weakened discernibly, the survey found.
“The best way to summarize how CEOs of American enterprises in Canada feel is that everything is OK—their enterprises are OK—but there is some anxiety about the future strength of the Canadian economy,” Nanos said.
The survey, which is a joint study by AmCham Canada and Nanos and sponsored by PNC Bank, was conducted between August 6 and October 8, before the Canadian elections took place on October 21.
