This is not surprising given the relatively healthy profit situation, the high
level of business confidence and the expected growth in spending.
In the Conference Board's
Index of Business Confidence survey, business leaders cited weak market demand, government policies, a shortage of qualified staff, and the depreciation of the Canadian dollar (which increases the cost of imported technology and machinery) as reasons for not investing.
In particular,
indicators of business confidence remain above long - run levels, overall profitability remains strong, and business investment is expected to continue to grow, albeit more slowly than in the past two years.
The Roy Morgan
research of business confidence released on Thursday showed a sharp drop in December from post-election highs, especially among small businesses.
As the number of firms announcing redundancy consultations this week continued to rise — with news of widespread cuts at Berwin Leighton Paisner — new research from Legal Week has found a surprising
degree of business confidence among partners in UK law firms.
The outlook for business investment is positive, given the ready access to internal and external funding, the high levels of capacity utilisation and the high
level of business confidence.
The Commerce Department also said orders for non-defense capital goods excluding aircraft - seen as a measure
of business confidence and spending plans — edged up 0.1 percent instead of the 0.5 percent drop reported last month.
The decline in this measure
of business confidence has, however, been somewhat more marked than the declines in indicators of firms» employment and capital expenditure plans recorded in the same survey (Graph 17).
Industrial production and exports have risen in recent months and most measures
of business confidence are considerably firmer than earlier in the year (Graph 8).
Measures
of business confidence have risen steadily since mid 2003 to be back around more normal levels, and concurrently there has been a slight rise in the trend for industrial production.