Canada: Canada’s business outlook strengthens

Business prospects show first signs of improvement following two years of overall modest activity, according to the Bank of Canada’s Business Outlook survey. Expectations of future sales growth have strengthened as the drag of the oil price shock has dissipated and demand from domestic and US buyers picks up. However, the report pointed to “considerable uncertainty” surrounding the implications of the US election outcome, particularly the risk of increased protectionism.

The central bank further added that “positive investment intentions are now evident in all regions and sectors, particularly among exporters” as the weaker Canadian Dollar and stronger US Dollar demand continues to support sales expectations. There are also indications of widespread employment intentions over the next 12 months, with firms citing sales growth and expansion plans as the main factors driving this view. RFi Group data further shows that among small and medium enterprises, which represent 98% of all businesses in Canada, over 2 in 5 businesses are looking to expand in the next 12 months, up slightly from a year ago. However, resource-related firms still report limited hiring plans and “material excess slack” remains in regions affected by the slump in the energy sector.

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