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Most firms in Canada reported stronger and investment plans in the light of strengthening demand, the Bank of Canada (BoC) noted in its Business Outlook Survey for the fourth quarter, per Reuters.

Additional takeaways

“Firms pointing to continued recovery, reports indicator turning positive for the first time since pandemic started.”

“Although around half of firms said current sales were below pre-pandemic levels, most firms expect sales to increase in the next 12 months.”

“One-third of businesses, mostly those that provide high-contact services, do not see sales returning to pre-pandemic levels in the next year.”

“Firms report increased pressure on input costs, largely linked to more expensive freight; more firms plan to pass these higher costs through to output prices.”

“Most businesses anticipate the positive impacts of vaccines will not materialize until later in 2021.”

“Many goods-producing firms reporting supply constraints linked to pandemics, such as long wait times sourcing materials from the US or Asia.”

“Firms expect overall inflation to remain somewhat below 2% over the next two years.”

“Consumer expectations for 1-year-ahead inflation increased, more than reversing the decline seen in Q3; this could reflect pick-up in growth of gasoline prices.”

Market reaction

The USD/CAD pair largely ignored this report and was last seen consolidating its daily gains near 1.2800, rising 0.9% on a daily basis.