Business outlook more rosy overall but Prairies still hard hit, Bank of Canada says
Differences between Central Canada and the Prairies, facing turmoil in energy sector, more pronounced
A new survey by the Bank of Canada suggested that business sentiment in the country has edged higher, but differences between the Prairies, hard hit by the turmoil in the energy sector, and Central Canada have grown more pronounced.
The central bank's survey of senior management at roughly 100 firms suggested "a slight improvement" in overall business sentiment as businesses expected moderate sales growth in the year to come.
However, due to ongoing challenges in the energy sector, the Bank of Canada said overall sentiment was negative in the Prairies.
"The responses to most indicators of business activity, capacity pressures and prices for firms in the Prairies have deteriorated to low levels in this survey," the central bank said.
The report found that business plans to invest more were widespread outside the Prairies.
"Firms frequently mentioned strategic investments in technology, automation and software systems as well as capital spending plans to support demand growth," the Bank of Canada said.
"However, several businesses, many of them in the Prairies, reported that regulation, uncertainty and their balance sheet position are holding back their investment plans."
The overall balance of opinion on hiring intentions came in just below the historical average due to weakness in the energy-producing regions, while businesses in Central Canada and B.C. reported robust plans to add jobs.
Interest rate announcement comes next week
The business outlook survey report comes ahead of the Bank of Canada's interest rate announcement and monetary policy report next week.
The Bank of Canada has kept its key interest rate target on hold at 1.75 per cent in recent months, predicting that the weakness in the economy to start the year was temporary and that growth would pick up this year.
The central bank is expected to update is economic forecasts as part of its monetary policy report.
The Bank of Canada business outlook survey was done from Aug. 20 to Sept. 13, near the start of the federal election campaign which kicked off officially on Sept. 11.
The Liberals were returned to power in the election Monday, but reduced to a minority government that will have to find support from other parties in the House of Commons if it hopes to survive.
The Liberal campaign platform did not include a timeline for the federal government to return to a balanced budget.