Bank of Canada unlikely to cut rates after ‘surprisingly positive’ business sentiment report

The Bank of Canada found a slight improvement in business sentiment in Canada, despite fears of rising global trade tensions and a potential U.S. recession, according to a Business Outlook Survey released on Tuesday.

Still, the survey also suggested that Canada’s regions are experiencing current economic conditions very differently. While the economy appears to be humming in Ontario, Quebec and British Columbia, with businesses confident about sales growth, hiring plans and investment intentions, the picture is markedly less positive in the Prairies as the energy sector struggles.

Given the rise in trade tensions since the time of the last survey in June, Jaznen said the expectation was for businesses to pull back on investment decisions. Brian DePratto, a senior economist at TD Economics, noted the sales outlook remains unchanged with a net of 23 per cent of respondents predicting accelerating growth over the next 12 months.

Avery Shenfield, chief economist of CIBC Capital Markets, agreed but said the picture is mixed. The economy is growing somewhere close to its non-inflationary potential in the third quarter, but sentiment is only slightly above its historic average as a result of weakness in the prairies.

The Canadian economy continues to perform very well .

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