The Bank of Canada's Business Outlook Survey shows increased pessimism among businessmen in the first quarter of this year. The balance of opinion on future sales growth, which declined seven percentage points in the fourth quarter of 2010, declined a further 9 points in the first quarter of this year. The balance of optimists over pessimists regarding future sales is down 31 points from a year ago. Opinion on past sales growth was down only one point and at 29% was still 72 points above the year ago balance of -43%. The balances of opinion on past and future sales growth are shown in the first chart.

Business is also less optimistic about investment and employment. The excess of optimists over pessimists regarding the investment of machinery and equipment declined from 29% in the fourth quarter of last year to 24% in the first quarter of this year but is still 2 points above the year ago balance. Similarly, the opinions regarding the prospects for increased employment have diminished. The excess of optimists over pessimists declined to 37% in the first quarter from 41% in the fourth quarter of 2010. The balances of opinion on prospects for investment and employment are shown in the second chart.

Part of the caution expressed by business in the latest survey may have been influenced by the fall of the Conservative Government. An election is now scheduled for May 2, The main contenders are Stephen Harper, Conservative; Michael Ignatieff, Liberal; and Jack Layton, New Democrat Party.