Canadian Manufacturing

Export outlook inches up yet confidence dips: Bank of Canada

April's Bank of Canada survey showed some signs of improvement for exporters, but businesses have not materially changed expectations from the spring


Bank of Canada data suggests the outlook for exporters is improving because of a better American economic climate

TORONTO—According to the Bank of Canada’s summer outlook, executives gave generally positive responses across a number of questions but, in most cases, confidence levels dropped from the spring survey.

Most also remained cautious on investment and hiring.

The Bank of Canada’s analysis was that businesses have not materially changed expectations from the spring.

The survey is one of the ways the central bank gauges the economy. It relies on a summary of interviews conducted with senior management at about 100 Canadian firms on topics such as demand and capacity, and how they view future economic activity.

April’s Bank of Canada survey showed some signs of improvement for exporters, with businesses saying that they had a positive outlook based on a strengthening U.S. economy and a depreciation of the Canadian dollar.

The Canadian dollar is entering the second half of the year around the US94-cent level, close to its highest point for 2014 and much to the discomfort of the country’s exporters.

Those elevated levels could be tested Friday when Statistics Canada releases June employment data. The agency is expected to report that about 24,000 jobs were created last month compared with 25,800 in May, with the jobless rate remaining unchanged at seven per cent.

Ian Nakamoto, director of research at 3MACS, said the loonie could fall if the figures do not come in as expected.

Analysts say the dollar’s rise from 89 cents US earlier in the year is due to rising inflation, an improving export outlook, a better American economic climate and rising oil prices.

“The net CAD (Canadian dollar) position has shifted net positive for the first time since February 2013, highlighting that finally sentiment towards CAD has turned favourable, removing a major weight against CAD,” said Camilla Sutton, chief FX strategist, managing director, Scotiabank Global Banking and Markets.

“The net long position… is very small, but it is not the size but the shift to a more balanced outlook that is important.”

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