Bank of Canada sees business outlook improving
Bank of Canada sees business outlook improving
OTTAWA — Hiring intentions by Canadian companies over the coming year rebounded strongly in the fourth quarter, according to the Bank of Canada's quarterly business outlook survey released Monday.
Furthermore, the bulk of Canadian firms suggested they still plan to increase their capital investment in the next 12 months in an effort to become more competitive and pursue new markets.
The latest optimism about capital spending and hiring plans is "supported in part by firms' efforts to become more competitive and to create new growth opportunities, or by their expectations that demand will continue to improve over the next 12 months," the Bank of Canada said of its latest findings.
A separate survey of senior loan officers suggested business-lending conditions have improved, due to heightened competition among lenders and a more favourable economic outlook. Business demand also appears to be picking up.
Companies also believe input costs are set to climb over the next 12 months, with expectations for inflation between the two-to-three per cent range increasing in the October-to-December period.
The outlook survey, published each quarter, was conducted between mid-November to Dec. 10, involving interviews with senior managers at 100 companies across the country. The Bank of Canada uses this survey to judge business sentiment and helps guide policy decisions.
Overall, companies remain positive about the outlook, with 51 per cent reporting that sales are expected to pick up at a faster pace over the next 12 months, although down from the 55 per cent reported in the previous quarter.
"Our main take-away is that Canadian businesses remain largely upbeat about their future sales as they trade off Canadian-dollar pressures against easing credit conditions," said economists at Scotia Capital in a note to clients.
The survey indicated hiring intentions rebounded strongly in the fourth quarter after easing in the July-to-September period, and may help explain data released last week showing 22,000 net new jobs created in December, the best monthly performance since August.
Just under half of firms surveyed, 49 per cent, said employment levels are expected to be higher over the coming year, compared to a 39 per cent reading in the previous survey.
Companies' plans to acquire productivity-enhancing machinery and equipment at a faster pace eased slightly from record-high levels hit in the last survey. Nevertheless, 44 per cent suggested they expected greater investment over the next year, with 41 per cent indicating capital-spending levels would remain the same.
"The outlook for investment remains upbeat, which backs the Bank of Canada's projection that (business) investment will continue to play a key role in Canada's growth during 2011," said Ryan Brecht, economist at Action Economics of Boulder, Colo., which expects the Canadian economy to expand 2.7 per cent this year — powered by a 16.7 per cent gain in purchases of machinery and equipment.
The central bank noted that the strength in commodity prices in recent weeks has raised optimism among firms tied to commodity-related activities, particularly in oil and mining.
In terms of prices and inflation, companies surveyed expect input and output costs to increase at a greater rate over the next 12 months. The number of firms expecting input costs to increase at a faster pace was relatively unchanged from the previous survey, although only 11 per cent this time around indicated price hikes would slow over the coming year compared to 23 per cent in the previous survey.
Meantime, inflation expectations among firms remain well anchored in the one-to-three per cent range, the central bank survey suggested. However, 44 per cent of companies said they expected inflation to be in the two-to-three per cent range over the next two years, compared to 32 per cent in last survey released in October. Meanwhile, 47 per cent said inflation would be between one and two per cent, down from 53 per cent.
The Bank of Canada sets its key policy rate in an effort to maintain or reach two per cent inflation. The annual rate of inflation hit two per cent in November, according to the latest Statistics Canada data, while the core rate, which strips out volatile-priced items such as food and energy, was 1.4 per cent.
© The Financial Post
Read more: http://www.calgaryherald.com/business/Bank+Canada+sees+business+outlook+improving/4085921/story.html#ixzz1AlJQGUwa
OTTAWA — Hiring intentions by Canadian companies over the coming year rebounded strongly in the fourth quarter, according to the Bank of Canada's quarterly business outlook survey released Monday.
Furthermore, the bulk of Canadian firms suggested they still plan to increase their capital investment in the next 12 months in an effort to become more competitive and pursue new markets.
The latest optimism about capital spending and hiring plans is "supported in part by firms' efforts to become more competitive and to create new growth opportunities, or by their expectations that demand will continue to improve over the next 12 months," the Bank of Canada said of its latest findings.
A separate survey of senior loan officers suggested business-lending conditions have improved, due to heightened competition among lenders and a more favourable economic outlook. Business demand also appears to be picking up.
Companies also believe input costs are set to climb over the next 12 months, with expectations for inflation between the two-to-three per cent range increasing in the October-to-December period.
The outlook survey, published each quarter, was conducted between mid-November to Dec. 10, involving interviews with senior managers at 100 companies across the country. The Bank of Canada uses this survey to judge business sentiment and helps guide policy decisions.
Overall, companies remain positive about the outlook, with 51 per cent reporting that sales are expected to pick up at a faster pace over the next 12 months, although down from the 55 per cent reported in the previous quarter.
"Our main take-away is that Canadian businesses remain largely upbeat about their future sales as they trade off Canadian-dollar pressures against easing credit conditions," said economists at Scotia Capital in a note to clients.
The survey indicated hiring intentions rebounded strongly in the fourth quarter after easing in the July-to-September period, and may help explain data released last week showing 22,000 net new jobs created in December, the best monthly performance since August.
Just under half of firms surveyed, 49 per cent, said employment levels are expected to be higher over the coming year, compared to a 39 per cent reading in the previous survey.
Companies' plans to acquire productivity-enhancing machinery and equipment at a faster pace eased slightly from record-high levels hit in the last survey. Nevertheless, 44 per cent suggested they expected greater investment over the next year, with 41 per cent indicating capital-spending levels would remain the same.
"The outlook for investment remains upbeat, which backs the Bank of Canada's projection that (business) investment will continue to play a key role in Canada's growth during 2011," said Ryan Brecht, economist at Action Economics of Boulder, Colo., which expects the Canadian economy to expand 2.7 per cent this year — powered by a 16.7 per cent gain in purchases of machinery and equipment.
The central bank noted that the strength in commodity prices in recent weeks has raised optimism among firms tied to commodity-related activities, particularly in oil and mining.
In terms of prices and inflation, companies surveyed expect input and output costs to increase at a greater rate over the next 12 months. The number of firms expecting input costs to increase at a faster pace was relatively unchanged from the previous survey, although only 11 per cent this time around indicated price hikes would slow over the coming year compared to 23 per cent in the previous survey.
Meantime, inflation expectations among firms remain well anchored in the one-to-three per cent range, the central bank survey suggested. However, 44 per cent of companies said they expected inflation to be in the two-to-three per cent range over the next two years, compared to 32 per cent in last survey released in October. Meanwhile, 47 per cent said inflation would be between one and two per cent, down from 53 per cent.
The Bank of Canada sets its key policy rate in an effort to maintain or reach two per cent inflation. The annual rate of inflation hit two per cent in November, according to the latest Statistics Canada data, while the core rate, which strips out volatile-priced items such as food and energy, was 1.4 per cent.
© The Financial Post
Read more: http://www.calgaryherald.com/business/Bank+Canada+sees+business+outlook+improving/4085921/story.html#ixzz1AlJQGUwa
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