Source: Bank of Canada
The results of the winter Business Outlook Survey indicate that business prospects have improved following two years of overall modest activity. The responses reflect building domestic demand, a supportive export outlook and an expected
- Forward-looking measures of business activity have improved as domestic sales growth gains momentum. The drag from the oil price shock and related spillovers is gradually dissipating, and demand growth remains steady in less-affected regions. Foreign demand continues to support export prospects.
- Both investment and employment intentions recovered and are more broad-based, driven by stronger demand and, in some cases, the need to catch up following a period of anemic investments and layoffs.
- Capacity pressures are unchanged, but responses point to some firming ahead, albeit from low levels in regions tied to energy. Indicators of labor shortages continue to move up from their recent weak levels, although they still diverge between resource-intensive regions and others.
- Input and output price growth are expected to accelerate, owing to the combination of anticipated stronger commodity prices, pass-through of exchange rate depreciation and signs of firming demand, allowing firms to begin restoring profit margins.
- Inflation expectations edged up from a low level and remain concentrated in the lower half of the Bank’s inflation-control range.
- Credit conditions are roughly unchanged, and most firms characterize credit as easy or relatively easy to obtain recovery in energy-related activity.
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