Canadian business sentiment continued to show signs of recovery, with executives more optimistic about investment than at any time since 2010, according to a Bank of Canada survey of corporate managers.
Measures of investment, employment and sales prospects improved, according to the Bank of Canada’s quarterly Business Outlook Survey, which cited everything from a recovery of oil prices to the impacts of a weaker Canadian currency.
The readings are another signal Canada’s economy has turned the page on the oil crash that began more than two years ago. GDP has expanded 1.5 per cent since October, the biggest three-month gain since 2011.
“Taken together, the results suggest a modest recovery in business sentiment after a two-year period of weakness,” the report said.
- The share of companies expected to increase investment in machinery and equipment was 46 per cent in the survey, while those projecting a decline was 11 per cent. The 35 percentage point balance of opinion was the highest since 2010.
- The balance of opinion on hiring intentions rose to 38 percentage points, the highest level since 2014.
- The share of businesses expected an increase in sales was 52 per cent, versus 31 per cent who see a decline. While the 21 point balance of opinion was slightly below the 26 per cent reading in the last quarter, it marked the first time since 2014 of back-to-back readings of above 20 per cent.
- An indicators of future sales growth — a gauged that looks at things like orders, advanced bookings and sales inquiries — saw its balance of opinion rise to 46 per cent, the highest since 2012.
- The Bank of Canada’s overall Business Outlook Survey Indicator — an aggregate gauge — measured 0.77. While down from 1.13 the previous quarter, the back-to-back positive readings followed a long string of negative scores for this measure.
Other highlights include:
Pressures on capacity are still modest.
Firms in energy producing areas see a recovery under way.
Export prospects continue to support the outlook, in spite of elevated uncertainty about potential U.S. policy changes, in particular corporate tax cuts and protectionist measures.