RELO July 2019

RELO

Regina Executive Leadership Outlook Quarterly Report: July 2019

CONTENTS PAGE 2

Executive Summary

PAGE 3

Economic Outlook Dashboard Executive Confidence Current Conditions Fixed Investments Employment Sales Revenue Profitability

PAGE 6

Conclusion About the Report

Executive Summary This edition of the Regina Executive Leadership Outlook continues to show positive trends. The Executive Confidence Index rose to 2.21 as a result of Regina’s executives’ belief that the economy will remain the same over the next 12 months, with a decline in respondents who believe it will worsen.

Regina executives (86.9%) expect to employ the same or more people in the next year. This is an increase from 82.4% the previous quarter. These thoughts are reflected in EDR’s monthly Economic Report Card.

The June report showed an increase in employment numbers and decrease in the unemployment rate, with improvements in both month-to-month, and year-to-date numbers.

Additional highlights from the report: ˙ Executives

appear increasingly optimistic about the economic outlook

˙ 5 0%

of respondents believe the economy is performing the same compared to a year ago (increasing from 47.1%)

˙ More

respondents believe their sales revenue will remain the same during the next year

There are positive early signs of improved perception of the Greater Regina Area economic conditions.

With continued stability and utilization of our natural strengths, the economic outlook of Regina’s executives continues to trend upward.

Concurrently 44.7% of respondents expect their business’s total fixed investments to remain the same over the coming year, an improvement from 41.2% the previous quarter. This trend is captured by the current building permit numbers available in EDR’s Economic Report Card. Businesses are holding fast, and as a result are not expanding, as indicated in the overall decline of building permits.

2

Regina Executive Leadership Outlook

Economic Outlook Dashboard CURRENT CONDITIONS

EXECUTIVE CONFIDENCE In the second quarter of 2019, the Executive Confidence Index stands at 2.21, continuing to trend upward since the two year low observed in the fourth quarter of 2018 (2.13).

The Executive Confidence Index remains below the overall Index Average (holding at 2.28) but is pulling away from the neutral point of 2.0. Executives appear increasingly optimistic about the economic outlook for the next year.

3.0

2.60

2.55 2.5

2.28

2.0

2.23

2.21 2.08 2.11

2.36

2.31

2.23

2.39 2.32

2.28 2.21 2.13 2.16

A calculation similar to the Executive Confidence Index reports executives’ perception of today’s economic onditions as compared to one year ago. When asked to compare their firm’s economic condition to one year ago, executives rate the current economic condition of their business at 2.03, an increase from the neutral mark of 2.00 observed last quarter. The Confidence Index and Current Conditions Index continue to be strongly correlated (r=.784, p <.001), indicating that a change to the confidence index is likely to be accompanied by a similar shift in current conditions. After a steady decline in perceptions of current economic conditions through 2018 and into early 2019, executives are showing early signs of improved perceptions of the current economic conditions for their business.

1.5 3.0 1.0

2.60

2.55 2016 2016 2016 Q1 Q2 Q3

2016 2017 Q4 Q1

2017 Q2

2017 Q3

2017 Q4

2018 2018 2018 2018 Q1 Q2 Q3 Q4

2019 Q1

2019 Q2

Confidence Index Index Average

The increase in this quarter’s Executive Confidence Index is due to a decrease in the percentage of executives esponding that the economy will worsen over the next 12 months across all economic future indicators.

Subsequently, we observe an increase across all indicators in the percentage of executives believing the economy will remain the same over the coming year.

economicdevelopmentregina.com

2.5

2.23

2.08 2.11

2.23 2.21

2.0

1.98

1.87 1.85

2.01

2.39 2.32

2.36

2.31

2.14 1.91 1.88

2.24 2.05

2.21 2.13 2.16

2.08 2.10 2.06 2.00 2.03

1.5

1.0

2016 2016 2016 Q1 Q2 Q3

2016 2017 Q4 Q1

2017 Q2

2017 Q3

2017 Q4

2018 2018 2018 2018 Q1 Q2 Q3 Q4

2019 Q1

2019 Q2

Confidence Index Current Conditions Index

Half (50.0%) of executive respondents believe the current economy is performing about the same as compared to one year ago (up from 47.1% last quarter). The balance believes the current economy is either performing better (10.5%, down from 11.8%) or worse (39.5%, down from 41.2%) compared to one year ago.

3

FIXED INVESTMENTS

EMPLOYMENT

An increasing two-fifths (44.7%) of respondents expect their firm’s total fixed investments to remain the same over the next twelve months (up from 41.2% last quarter). There has been a corresponding decline in both the proportion of respondents who expect their firm’s total fixed investments to increase (36.8%, down from 38.2%) and the proportion who expect their firm’s total fixed investments to decrease (18.4%, down from 20.6%).

An increasing 86.9% of respondents expect their firm to employ either more or the same amount of people over the coming year up from 82.4% last quarter). The overall proportion of respondents who expect their firm to employ more people has remained relatively steady (39.5%, down 1.7%), while there has been a jump in the proportion who expect their firm to employ the same number of people (47.4%, up 6.2%). By comparison, there is a declining trend in the proportion of executive respondents who believe they will employ fewer people over the next 12 months (13.2%, down 4.4%).

In the next 12 months, will your firm’s total fixed investments…

In the next 12 months, will the number of people your firm employs…

HISTORICAL COMPARISON 80%

HISTORICAL COMPARISON 70%

80%

60%

70%

50%

44.7%

40%

60%

47.4%

50%

36.8%

30%

40%

39.5% 20%

30%

18.4% 10%

20%

0% 2016 2016 2016 Q1 Q2 Q3

2016 2017 Q4 Q1

2017 Q2

2017 Q3

2017 Q4

2018 2018 2018 2018 Q1 Q2 Q3 Q4

2019 2019 Q1 Q2

10%

13.2%

0% 2016 2016 2016 Q1 Q2 Q3

QUARTERLY COMPARISON 100

2016 2017 Q4 Q1

2017 Q2

2017 Q3

2017 Q4

2018 2018 2018 2018 Q1 Q2 Q3 Q4

2019 2019 Q1 Q2

QUARTERLY COMPARISON 38.2%

80

36.8% 100

60 80

41.2%

40

41.2%

39.5%

41.2%

47.4%

17.6%

13.2%

2019 Q1

2019 Q2

44.7% 60

20 0

Increase Stay the Same Decrease

20.6%

18.4%

40

2019 Q1

2019 Q2

20 0

Increase Stay the Same Decrease

4

Regina Executive Leadership Outlook

SALES REVENUE

PROFITABILITY

Over four-fifths (81.6%) of respondents expect sales revenue to either increase or remain the same in the next 12 months.

While the proportion of respondents expecting their firm’s sales revenue to increase over the next year has dropped slightly this quarter (47.4%, down 2.6%), more respondents expect sales revenue to stay the same (34.2%, up 7.7%) and fewer expect sales revenue to drop (18.4%, down 5.1%).

Eight-in-ten (81.6%) respondents expect their firm’s profitability to either increase or remain the same over the next 12 months.

While the proportion expecting their firm’s profitability to decrease has held relatively steady since last quarter (18.4%, down 2.2%), there has been a jump in the proportion expecting profitability to stay the same (50.0%, up 8.8%) and a drop in those expecting profitability to improve (31.6%, down 6.6%).

In the next 12 months, will your firm’s sales revenue…

In the next 12 months, will your firm’s profitability…

HISTORICAL COMPARISON

HISTORICAL COMPARISON

80%

80%

70%

70%

60%

60%

47.4%

50%

40%

34.2%

30%

50.0% 50%

40%

30%

20%

31.6%

20%

18.4% 10%

18.4% 10%

0% 2016 2016 2016 Q1 Q2 Q3

2016 2017 Q4 Q1

2017 Q2

2017 Q3

2017 Q4

2018 2018 2018 2018 Q1 Q2 Q3 Q4

QUARTERLY COMPARISON

2019 2019 Q1 Q2

0% 2016 2016 2016 Q1 Q2 Q3

2016 2017 Q4 Q1

2017 Q2

2017 Q3

2017 Q4

2018 2018 2018 2018 Q1 Q2 Q3 Q4

2019 2019 Q1 Q2

QUARTERLY COMPARISON

100

100

80

50.0%

47.4%

60

80

41.2%

31.6%

60

40

26.5%

34.2%

23.5%

18.4%

2019 Q1

2019 Q2

20 0

Increase Stay the Same Decrease

praxis-consulting.ca

40

38.2%

50.0%

20 0

20.6%

18.4%

2019 Q1

2019 Q2

Increase Stay the Same Decrease

5

Conclusion There is an emerging, yet cautious, sense of optimism among GRA’s business executives as they forecast the economic environment for 2019. When compared to the first quarter of the year, we observe improvements across all indicators in the proportion of executives believing the economy will remain the same over the next 12 months, and a corresponding decline in the proportion who expect the economy to worsen.

The Executive Confidence Index is currently 2.21, continuing to trend upward from the 2-year low observed in the fourth quarter of 2018. The current Executive Confidence Index is consistent with results observed in late 2016 to early 2017.

ABOUT THE REPORT Economic Development Regina (EDR), in partnership with Praxis Consulting (Praxis), began a quarterly publication entitled, “Regina Executive Leadership Outlook” in September 2014 that captures the thought leadership of senior business leaders in the Greater Regina Area (GRA) on key issues facing Regina and surrounding areas.

The survey is distributed to a list of approximately 75 senior business leaders. The survey has a standard component entitled “The Economic Outlook.” This is a set of static questions asked each quarter that inform a unique Executive Confidence Index. This index is used to measure how confident executives are in Regina’s overall economy across each quarter.

Every second quarter, Praxis and EDR pick a specific topic as the focus of the publication. Praxis then develops a survey questionnaire to gather quantitative data and an interview questionnaire to gather qualitative data using the chosen topic.

This quarter, Praxis and EDR opted to defer the specific topic report to Quarter 3 of 2019.

Survey Fieldwork for this project included 38 surveys completed

by CEOs and senior executives in Regina’s business community.

Survey responses were received via an online survey, delivered to each participant by email. Responses were collected May 22 – June 7, 2019.

A total of 74 survey invitations were sent; the response rate is 51.4%. Margins of error cannot be applied to this type of non-probability sample.

In many cases data is captured on symmetrical, verbally-anchored five-point response scales. ˙ On

this scale, responses of 1 or 2 are negative; a response of 3 is neutral, and responses of 4 or 5 are positive.

˙ This

report shows frequency of response at every option in the response set, along with a mean, to indicate the overall level of response.

6

Regina Executive Leadership Outlook

economicdevelopmentregina.com

7

ABOUT EDR

ABOUT PRAXIS

Economic Development Regina Inc. (EDR) is the economic development agency for the Greater Regina Area.

Praxis Consulting is Saskatchewan’s largest locally-based management consulting firm.

EDR is a not for profit economic development corporation, governed by a volunteer board of directors. EDR provides leadership to the community to support industry growth and diversification through retention and expansion of existing business and encouraging investment, development of industry and tourism.

Praxis works collaboratively with clients in the facilitation of growth and excellence. Leveraging an unmatched wealth of experience across multiple sectors, Praxis adds value to their clients through:

In collaboration with key stakeholders, we work to identify, develop and promote opportunities that advance economic prosperity and ensure the Greater Regina Area offers a vibrant and diversified economy for investors, is a positive destination experience for visitors and offers a high quality of life for residents.

˙ Strategy:

David Froh, Vice President E: dfroh@economicdevelopmentregina.com P: 306-565-6389

˙ Research:

Information gathering and data analytics.

Thought-leadership, rigorous planning, and pragmatic strategies.

˙ Results:

Cascading strategy and culture within the organization.

Valerie Sluth, CEO E: vsluth@praxis-consulting.ca P: 306-545-3755