Canada’s business leaders are becoming more pessimistic about the state of the Canadian economy, according to The Conference Board of Canada’s Index of Business Confidence. The index fell 6.9 points to 93.1 in the first quarter, the lowest level in the last six quarters.

The research found businesses do not expect the rapid sales growth they saw in 2017 to continue. They stated concern about the impact of government policy on business competitiveness and about the availability of labor. Business leaders also reported increased concern about the competitiveness of the Canadian economy in the face of US tax cuts, a weak Canadian dollar, and an uncertain future for NAFTA.

“Canada’s businesses had been experiencing relatively high levels of confidence in the economy throughout most of 2017 but, business confidence reversed course in the final quarter of the year. The first-quarter results for 2018 are closer to the 2016 average, a sign that businesses see the economy moving into a new, slower-growth phase,” said Matthew Stewart, director, national forecasting, at The Conference Board of Canada.

Much of the decline in the index came from significantly weaker investment intentions and financial expectations. When asked what factors are adversely affecting planned expenditures, the most frequent response was government policy, cited by half of the firms as negatively affecting them in one way or another. A shortage of qualified staff was the second-most-frequent response, noted by 40% of firms. The third-most-common response was the rising cost of labor.

The survey of business confidence was conducted from March 9 to April 13, 2018.