Weakness at home, uncertainty linked to Europe, and a slowdown in China are complicating life for companies on both sides of the Canada-U.S. border, making many think twice before hiring or investing.
The underwhelming employment figures for North America that were reported last week are perhaps the most vivid illustration of this.
In June, private-sector employers in the U.S. added the fewest jobs in 10 months, while Canadian private employment fell for a second consecutive month.
On Monday, the Bank of Canada publishes its quarterly survey of businesses across the country, a poll that will influence policy makers' thinking as they finalize new forecasts for Canada, the U.S. and the global economy due for release next week.
Governor Mark Carney has acknowledged that his initial forecasts for 2012 were too optimistic, but the survey offers a relatively real-time sense of how much faith Canada's executives have in their own prospects.
"We don't really need to wait," Douglas Porter, deputy chief economist at BMO Nesbitt Burns, wrote last week. "The spring pullback in stocks points to a souring of business sentimentSeparate polls do point to a less upbeat Bank of Canada survey, the last of which (from April) found businesses making plans to ramp up hiring and investing, as they expressed the most optimism about sales growth since early 2010.
On Wednesday, the Canadian Federation of Independent Business said small-business confidence had fallen to its lowest level since August, 2011. And in mid-June, the latest C-Suite survey of senior corporate managers showed they are sitting on cash and bracing for higher financing costs, mindful of how they were caught by surprise in 2008 when credit froze up.
Still, amid the caution, many businesses are finding a silver lining, suggesting Monday's Bank of Canada survey will not be all doom and gloom.
Mike Swartzback, co-owner of five Sports Experts franchises in the Ottawa region, said whether it's due to government job cuts or general anxiety among consumers, there is "no question" sales have slowed – despite two months of stellar weather.
Nonetheless, Mr. Swartzback says he is using this dry spell to look for opportunities to "stay current" and be in the best position possible when sales pick up again.
"It's the ones that don't invest in these tough times who end up suffering the most," he said. "You try and take advantage of circumstances and sort of go on an offensive."
For instance, aside from slashing some prices to entice a smaller pool of customers to buy more items, he is being extra choosy about hiring – taking advantage of the fact that with fewer openings throughout the retail sector, there are "better-quality applicants coming in," he said.
Gregory Luciani, president and CEO of Travel Only, an online travel agency based in Brantford, Ont., says he is keeping his office head count steady at 26 this year, but is still expanding his network of home-based travel consultants and salespeople.
"As we grow, I'm going to need more people, I'm just not hiring at the clip that was originally anticipated," he said.
Mr. Luciani said his company has been "playing defence" since 2008, as the stream of families booking trips to Disney World and other vacation spots started to dry up. But Europe's troubles have created an opportunity: the company is focusing on retired Baby Boomers, urging them to take epicurean tours and river cruises they've always dreamed about while prices are depressed.
"In travel, when things are bad – and they're brutal in Europe – you're going to get the best deal possible," he said. "That's what we're telling clients if they want to hold off. You've got to capitalize in every area you can."