Canadian Manufacturing

BoC says business optimism is moderating

The Bank of Canada says several indicators in its most recent survey have been tempered from strong summer survey results, including businesses' plans to increase spending over the next 12 months

October 16, 2017  by The Canadian Press

OTTAWA—The Bank of Canada says business sentiment is showing signs of tapering off following the stronger expectations companies held about the future three months ago.

However, the central bank says its quarterly survey of companies still suggests firms’ outlooks remain healthy _ particularly when it comes to prospects for future sales, foreign demand and hiring intentions.

The bank says its new poll of about 100 Canadian companies found that a large majority of firms predicted a rise in sales volumes and faster sales growth, which suggests expansion has become more entrenched.

The survey also says firms are reporting more orders from foreign customers compared to a year ago and that most companies didn’t foresee the uncertainty over U.S. trade policy having an affect on their outlooks.


The bank says businesses’ plans to increase spending over the next 12 months were somewhat less widespread than in recent surveys as the measure for investment expectations slipped closer to its historical average.

The findings also show that hiring intentions slowed since the last survey, but still remained positive in all regions and were elevated for the service sector.

The survey says companies are reporting more-intense labour shortages than they were a year ago, which lifted the indicator to its highest mark since the 2008-09 recession.

“Firms’ prospects remain healthy, although several survey indicators have moderated from the strong summer results,” the bank said in a statement.

The survey results were released about a week before the bank’s next scheduled interest-rate announcement.

Governor Stephen Poloz raised rates twice over the summer following the economy’s surprisingly powerful start to the year. But recent data has signalled the economy has started to cool somewhat and Poloz has said he expects slower growth in the second half of 2017.

Poloz has also indicated there’s no “predetermined path” for future rate hikes and that the bank would take a data-dependent approach.

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