Canadian business confidence drops for second straight quarter

Tue Nov 13, 2012 11:42am EST
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* Business confidence index drops to year-earlier levels

* Capacity utilization most significant drag on index

By Claire Sibonney

TORONTO, Nov 13 (Reuters) - Business confidence in Canada fell in the third quarter, the second decline in a row, as sentiment deteriorated to levels of a year earlier, the Conference Board of Canada said in a report on Tuesday.

The organization's index of business confidence dropped 5.5 points from the second quarter to 92.3. In the first quarter of 2012, it stood at 101.8.

The survey reflects fragile business and investment sentiment globally as fears about Europe's debt crisis have flared up again, while the U.S. budget impasse threatens to push the world's largest economy back into recession.

The Conference Board said that capacity utilization weakened sharply from the second quarter and was the most significant factor weighing on the index.

Only 32 percent of business leaders surveyed reported that their businesses are operating at, or close to, full capacity. This was the lowest capacity utilization rate since the beginning of 2010, early on in the economic recovery.

"Low capacity utilization will put downward pressure on future investment and economic growth," the Conference Board said in a statement.   Continued...