Optimism about the economic recovery is increasing among Canadian businesses, the Bank of Canada says.

In its annual survey of business conditions released Monday, the bank said firms are reporting improved sales activity over the past year.

The Bank of Canada's annual summer survey of business conditions suggests employers intend to increase hiring. (Philip Scott Andrews/Canadian Press)

That's the first time that's happened in two years.

The results of the survey also suggest executives are planning to take on new workers during the next 12 months.

In a separate survey, loan officers told the central bank they are extending credit to firms on better conditions, particularly big firms.

But not all signs are positive. Business executives say they are increasingly concerned over the prospect of global recovery.

Michael Gregory, senior economist with BMO Capital Markets, said that the results show "that firms continue to expect expanding activity, albeit not as broadly as before [in the April Survey]."

"Given the growing concern over the U.S. and global economic outlook, dimmer sales and investment expectations are not surprising," he said.

Bank staff interviewed senior managers at 100 firms selected as a cross-section of the Canadian economy, between May 19 and June 15.

The data collected on the perspectives of these businesses will be part of many factors the bank considers when making decisions about interest rates. The bank warned statistical reliability of the survey is limited, given the small sample size.

The bank is widely expected to raise rates when its policy setting committee next meets on July 20.

With files from The Canadian Press