Newspaper article The Canadian Press

Survey of Big Firm CFOs Finds Growing Pessimism, Modest Investment Intentions

Newspaper article The Canadian Press

Survey of Big Firm CFOs Finds Growing Pessimism, Modest Investment Intentions

Article excerpt

Big firm CFOs say it's time to hunker down

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OTTAWA - A new survey of chief financial officers at North America's biggest firms suggests the global gloom is starting to hit home and that they will curtail investment and hiring growth.

The so-called "high-end" survey by Deloitte of firms averaging $5 billion in annual revenues shows optimism about future prospects plummeting, particularly in the United States.

In Canada, CFOs were still largely positive with the difference between those who felt their firm's prospects would improve over those who felt they would worsen measuring 42 percentage points.

That's down from the plus-57 result of the last quarter, but still far more upbeat than they were at the end of 2011.

By contrast, U.S. CFOs were the most pessimistic with an equal number answering the question negatively as positively. Sentiment among Mexican chief financial officers was in between.

Canadian executives were also more optimistic about the unemployment situation -- only 16 per cent ranked it as a top concern compared with 59 per cent in the U.S.

The outlook for the Canadian and U.S. economies are similar, say analysts, with growth rates hovering around two per cent expected in the next two years.

But that's where the similarity ends. The U.S. still has not fully recovered from the 2008-09 recession, and only recouped about half the eight million jobs lost. Canada's gross domestic product is now above pre-recession levels, as is employment by close 250,000 jobs.

But even Canadian executives are less optimistic than they were three months ago, said Trevor Nakka of Deloitte, and overall, North American firms appear to be taking a wait-and-see posture.

"There's a caution out there," he said. "Business confidence has slipped and CFOs are positioning companies to hunker down. They are telling us they are paying a little less emphasis on (mergers and acquisitions) activity, paying a little less emphasis on expansion globally and they are focusing more on their existing markets and on cost management. …

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