Canada exporters' confidence tumbles on U.S. woes
OTTAWA (Reuters) - Fears of a worsening U.S. economy have dragged down confidence among Canadian exporters to the lowest level on record, Canada's federal export agency said on Thursday.
The trade confidence index, which monitors exporters' mood on a variety of trade and economic indicators, sank to 66.1 from 67.4 in January, the lowest level in the eight-year history of the semi-annual survey by Export Development Canada.
"Canadian exporters are clearly hurting right now thanks to a major slowdown in the U.S., a slowing global economy and a persistently high Canadian dollar," said Peter Hall, vice-president of economics and chief economist at EDC.
The United States buys about three-quarters of Canada's exports, leaving the country extremely vulnerable when U.S. buyers scale back their purchases. Indeed, according to the survey, a quarter of exporters now see the United States as their riskiest market, second only to Asia.
The survey was conducted in April and May and involved just over 1,000 businesses.
The No. 1 response to the tough times is "riding out the storm and absorbing the losses," EDC said. The second most popular strategy is to cut costs, but only about a quarter said they would pass on higher costs to consumers.
Exporters have also come under pressure from soaring energy costs and a strong Canadian currency, now around parity with the U.S. dollar. However, the Canadian dollar is unlikely to climb further, most exporters said.
Their pessimism about the global economy is growing, with 51 percent expecting it to deteriorate further, up sharply from 30 percent holding that gloomy outlook in the fall of 2007.
And they see slimmer chances of the domestic economy picking up the slack. Forty-two percent expect Canada's economy to get worse, up from 32 percent just six months earlier. Continued...