Yahoo Finance Bank of Canada survey suggests business sentiment improving slightly
A new Bank of Canada survey suggests business sentiment has improved slightly in Canada, with many businesses expecting an increase in sales growth over the next year.
The central bank’s business outlook survey indicator turned positive in the second quarter of 2019, edging up slightly above zero, following a period of steady decline that sent the indicator into negative territory.
The survey of executives, which was conducted from May 7 to June 3, found that expectation for foreign demand remains positive, suggesting that export sales growth will pick up modestly over the next year.
“The balance of opinion on future sales growth has moved up and is positive, pointing to a faster pace of sales growth in the next 12 months,” the bank said.
When it comes to sales outlook, 44 per cent of the companies surveys expect volumes to increase at a greater rate than the last year while 21 per cent expect a lesser rate of sales growth. At the same time, 36 per cent of companies say investment spending will be higher over the next year than the last year, while 16 per cent expect to spend less.
Still, weakness in Western Canada tied to languishing oil prices remains.
“Sales optimism is concentrated in Central Canada and includes positive expectations for housing activity,” the bank said. “Nevertheless, firms anticipate weakness in sales tied to the Western Canadian oil industry to persist.”
BMO senior economist Robert Kavcic wrote in a report Friday that the survey “came back a little bit stronger that most were expecting.”
“It is consistent with GDP data in suggesting that the weakness in the Canadian economy was temporary with (the second quarter) looking much better,” Kavcic wrote.
“For the Bank of Canada, this is one more reason to sit back and just listen while other central banks sing more dovish tunes. Had this survey deteriorated further, that might have been harder to do, but that wasn’t the case.”
The business outlook survey involves interviewing business leaders from approximately 100 companies to gauge economic perspectives on topics such as demand and capacity pressure.
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