The Bank of Canada (BoC) reports that business sentiment has reached its highest level since 2011, with corporate expectations for key areas like future sales, investment and hiring intentions all above historical averages.
The findings released on Friday in the BoC’s quarterly survey of Canadian firms will likely fuel growing expectations the bank will start hiking its benchmark interest rate next month.
The combination of the strengthening economy and recent, “more-hawkish” comments by governor Stephen Poloz have fed speculation the bank will increase its rate for the first time in seven years as soon as July 12.
“Results for nearly all the (business outlook survey) survey questions are above their historical averages, pushing the indicator to its highest level since 2011,” the BoC said, referring to its measure that summarizes all the responses in its survey of about 100 Canadian companies. “This result provides clear evidence of a generalized improvement in business sentiment.”
The survey found that business-hiring intentions for the coming year accelerated to reach its highest level on record since April.
“The balance of opinion on employment intentions over the next 12 months increased significantly,” the BoC said. “Firms most frequently mentioned the need to keep up with strong demand and plans to expand their business.”
The poll also showed companies expect sales growth to continue improving over the coming year, while business investment intentions for the next 12 months also remain elevated.
Overall, the bank says the positive business outlook has been spreading across industries and regions.
Canada has been enjoying a stronger-than-expected run of economic data since the start of the year in key areas such as growth, trade and the job market.
Statistics Canada unveiled the latest promising data point Friday — a reading that showed the economy grew by 0.2% in April.
Read: Canadian economy grew by 0.2% in April, matching expectations
Earlier this week, Poloz reiterated that the bank’s 2015 interest-rate cuts appeared to have done their job to help offset the negative effects of the oil-price shock on the broader economy.
Poloz has also noted the economy enjoyed “surprisingly” robust growth in the first three months of 2017 and that he expected the pace to remain above potential.
In recent weeks, a shift toward more-positive or “hawkish” statements by Poloz and the bank’s senior deputy governor, Carolyn Wilkins, suggested they were moving closer to a rate increase.
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