Bank of Canada’s next business survey is an important piece of the puzzle for interest-rate decision

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Business survey will tell whether the labour fires are still raging – and in need of another douse of rate hikes – or are burning on their last embers

Canada’s gravity-defying job market in December raises a burning question. Just what are Canadian business owners thinking?must be asking, after Statistics Canada’s release Friday of new data showing that employment jumped by 104,000 jobs last month. That was only, oh, about 100,000 more than economists had anticipated. The entire increase came from private-sector employers.

The major data releases since then have made a stronger case to raise than to pause. The inflation report for November was, at best, underwhelming; the overall rate barely moved, and core inflation readings inched higher. Now, the employment report delivers much stronger numbers than expected. For some pundits, that spells another rate increase, of at least one-quarter percentage point.

With regard to the employment numbers, the bank needs to get a handle on why hiring has remained so strong even as fast-risingThe Business Outlook Survey will provide vital colour to those judgments, and none too soon. It wouldn’t be the first time that the data said one thing, and businesses sentiment pointed to something very different. In late 2014, the Canadian economic indicators looked quite healthy, despite slumping commodity prices, most notably in the energy sector. But oil and gas business leaders told then-governor Stephen Poloz that they were planning massive reductions in capital spending. Mr.

 

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