OTTAWA - Multibillion-dollar stimulus packages winding through Parliament and the U.S. Congress couldn't come too soon, amid worrisome signs businesses are delaying new investments in expectations of worse times ahead.

A new business confidence survey released Thursday by the Conference Board of Canada finds companies putting off expansions and equipment purchases that economists say are key to improving productivity and reviving the economy.

For the first time since the recession of the early 1990s, the survey found more companies are scaling back, rather than increasing, their capital investment plans.

"This is not good news," said Conference Board economist Pedro Antunes.

"Investments are not only good up front but they are good down the road in driving up long-term capacity and growth. And you will find if businesses stop investing, pretty soon they start laying off workers."

Earlier this week, Finance Minister Jim Flaherty proposed $40 billion in tax cuts and spending over two years that includes many of the measures requested by businesses, including measures to free up commercial lending and an enriched tax writeoff on productivity-boosting new equipment purchases.

As well, Barack's Obama US$819-billion stimulus plan scaled the first political hurdle in the U.S. Congress late Wednesday night.

The plans, which could pass into law in a matter of days, "will help cushion the downturn," said economist Sal Guatieri of BMO Capital Markets.

"But there appears to be a lot of backward momentum, so they are up against pretty stiff headwinds."

The impact on the Canadian economy of the Obama stimulus may be muted by attempts in Congress to require "buy-America" restrictions that would discriminate against Canadian exports, especially steel.

Trade Minister Stockwell Day said he will take up the measure with his U.S. counterparts in Davos, Switzerland this weekend.

"It's just a bit premature to talk about launching a formal (trade) complaint," he told reporters. "The United States has very clear legal obligations under WTO and under NAFTA. We expect them to live up to those obligations."

Although economists say the stimulus packages will help improve consumer confidence, the hard economic news has all been going the other way.

In the past two weeks, blue chip U.S. companies such as heavy equipment maker Caterpillar, technology giants Intel and Microsoft, metals producer Alcoa and corporate titans Boeing, Pfizer and Home Depot have announced tens of thousands of job cuts.

About 125,000 in layoffs have been announced in January so far and the U.S. Labour Department said the number of Americans receiving unemployment benefits has reached an all-time high. Many predict the jobless rate could hit 10 per cent or more.

Meanwhile, the critical U.S. housing market shows no signs of hitting bottom. New home sales fell by 14.7 per cent last month to the lowest number since 1982.

In Canada, the signs are pointing to a broad retreat in economic activity following the loss of $105,000 jobs in the last two months of 2008.

Statistics Canada's industrial product price index declined for the fourth straight month by 1.9 per cent in December, and the raw materials price index fell 15.4 per cent.

Equifax Canada reported Thursday that consumer bankruptcies are rising across the country, increasing by nine per cent to 109,000 by the end of November over the same period last year.

Most economists believe that the first three months of 2009 will be the worst for the economy, contracting by as much as 4.8 per cent on an annual basis, in the Bank of Canada's estimates.

But Canadian business leaders don't see it that way. Close to 60 per cent of those polled by the Conference Board say they expect the economy to be even worse six months from now, as opposed to only 10 per cent who expect an improvement.

Only 24 per cent of respondents expect their financial position to improve, as opposed to 36 per cent who think it will get worse in the next six months.

The business confidence findings, the third worst ever recorded by the Conference Board, dovetail with the think-tank's near-record low consumer confidence results, both obtained in surveys conducted earlier this month.

What is most alarming is that businesses not only expect conditions to worsen, they say they are responding by cutting plans to expand and buy machinery and equipment, likely to further drag down the economy.

More than 60 per cent of respondents said they were putting off purchasing new equipment or expanding plants because of weak market demand, while 34.5 per cent cited tight credit.

Even viable businesses complained they were finding it difficult to borrow money under acceptable conditions, the Ottawa-based think tank says.