According to a report from BDC, Canadian entrepreneurs are optimistic about the economy and plan to boost their business investment to $96.6 billion in 2017.
The survey of 3,988 executives at small and mid-sized enterprises (SMEs) was conducted last August and September. Overall, the top investing priorities are growth and productivity projects, led by IT, training, machinery, equipment, and vehicles.
“This survey confirms the optimism we’re hearing from our business clients every day,” said Pierre Cléroux, BDC’s VP of Research and chief economist. “Entrepreneurs are increasingly confident in the economy, with exporters leading the way in terms of investment intentions. Canadian businesses are ready to invest and they have growth on their minds.”
Tech companies expressed the most optimism, with an average of $410,000 in planned investments in 2017, up 41 percent from the amount they invested in 2016. The manufacturing sector came second, with an average of $340,000 in investment intentions, up 17 percent over last year. Two-thirds of businesses intend to finance investments mainly with working capital or other internal funds, while less than one in four plan to use a loan or line of credit, despite favourable credit conditions.
Alberta SMEs led the provinces with a 17.1 percent jump in planned investments in 2017 versus 2016. Ontario foresees a 2.9 percent rise in investment intentions, Quebec expects a 0.6 percent increase, while Atlantic Canada maintains investment at the same level as 2016.
On the flip side, British Columbia and the territories anticipate a 5.4 percent decline in investment intentions and the Prairies forecast a 17.5 percent drop. Top-cited obstacles to investment are a lack of cash flow and lack of qualified talent.
“Our research also confirms technology is playing an increasingly important part in our economy. Greater investment will help Canadian companies get more productive and that’s key for staying competitive in the current business environment,” Cléroux said.
The survey reports that lack of confidence in the economy is no longer a top barrier to investment.
Businesses that invest more tend to project higher income growth. Those projecting 20 percent or higher growth plan to invest $380,000 on average in 2017. Even companies expecting zero or negative growth aim to invest an average of $150,000. Seventy percent of entrepreneurs expect increased sales, up 45 percent from BDC’s report last year.