BoC: Q4 Business Outlook Survey points to broadly positive business sentiment

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The business sentiment in Canada remained broadly positive in the fourth quarter, except in the prairies, where indicators were weak, the Bank of Canada’s (BoC) latest Business Outlook Survey showed on Monday.

“Indicators of future sales are positive outside of energy-producing regions; firms see signs energy-sector activity may have bottomed out noting progress on pipelines, easing of production limits; concerns about trade tensions declining,” the publication read. “Foreign demand, particularly US demand, improving; fewer firms expect a small US recession over the next 12 months than did in Q3; however some firms reported dampened prospects due to US protectionism.”

The USD/CAD pair came under modest pressure on the BoC’s remarks and erased 10 pips in the last minutes. As of writing, the pair was down 0.05% on the day at 1.3043. Below are some additional takeaways, per Reuters.

“Plans to increase investment spending less widespread as many firms have completed large investment projects; hiring plans widespread but concentrated in firms in Quebec and British Columbia.”

“Capacity pressures edged up due to tightening labour constraints; firms anticipate capacity pressures will increase over next 12 months.”

“Input price growth expectations turned positive due to commodity prices, reflecting price stabilization in some regions after a period of price declines.”

“Inflation expectations are unchanged; the majority of firms still anticipate inflation will be in the lower half of the bank’s target range of 1% to 3%.”

“Some firms reporting more favourable terms in credit conditions over the past three months due to greater competition among banks; several firms in prairies reported tighter credit conditions.”

“Q4 survey of consumer expectations says consumer expectations for one-year ahead inflation declined slightly in Q4 to 2.2% from 2.4%, most respondents expect inflation to remain within the BoC’s target range.”

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