Economy & Markets

Firms expect faster sales growth

By Andy Blatchford |
Source: The Canadian Press

Canadian companies remain positive about the future but there are signs business sentiment has begun to cool down from its mid-summer high, said new poll results released Monday by the Bank of Canada.

The central bank's quarterly survey of companies suggested firms still have "healthy" outlooks, particularly when it comes to prospects for future sales, foreign demand and hiring intentions.

This optimism remains intact despite shifting conditions that include higher interest rates and predictions the economy's powerful start to 2017 will slow in the second half of the year.

In its poll of about 100 Canadian companies, the bank found that a large majority of firms predicted a rise in sales volumes and on balance, firms expect faster sales growth, which suggests expansion has become more entrenched.

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

The survey also said 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.

However, plans by businesses 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.

Hiring intentions also slowed since the last survey, but still remained positive in all regions and were elevated for the service sector. Companies reported more-intense labour shortages than they were a year ago, which lifted the indicator to its highest mark since the 2008-09 recession.

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.