Canadian firms reported a slight uptick in sentiment in the third quarter, as investment intentions strengthened and credit concerns waned, giving the central bank little reason to move rates.
The Bank of Canada’s autumn survey of executives showed a moderate outlook for future sales along with “healthy” spending plans outside the prairies, lower input prices and restrained expectations for inflation. That’s despite concern that Canadian firms will be negatively affected by slower U.S. economic activity.
The composite gauge of sentiment moved up slightly, but remains below the high levels reached in 2017 and 2018. The Ottawa-based central bank changed the methodology for the indicator, resulting in revisions in the data set back until 2003. “Results from the autumn Business Outlook Survey indicate that business sentiment improved slightly, but regional differences are more pronounced,” the Bank of Canada said in a release. “Positive views in Central Canada contrast with widespread weakness in the Prairies.”
Businesses are citing immigration and strong activity in the information technology and non-residential construction industries as factors supporting sales. However, for companies tied to the energy sector, this suggests that sales will no longer fall or will only recover slightly.
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