More Canadian businesses plan to invest and hire this year, says survey - Action News
Home WebMail Thursday, November 14, 2024, 12:12 PM | Calgary | 7.1°C | Regions Advertise Login | Our platform is in maintenance mode. Some URLs may not be available. |
Business

More Canadian businesses plan to invest and hire this year, says survey

More Canadian businesses expect to hire and make investments over the next year, according to the latest survey from the Bank of Canada.

Central bank's latest business outlook survey shows increasing hiring, investment intentions

More Canadian businesses are planning to invest and hire over the next 12 months, according to a Bank of Canada survey. (Dan Riedlhuber/Reuters)

A majority ofCanadian businesses expect to hire and make investments over the next year as domestic demand gains strength, according to the latest survey from the Bank of Canada.

The results of the central bank's quarterly business outlook survey, released Monday morning, reflect increasing business confidence after two years of weakness triggered by the 2014 plunge in oil prices. That sentiment continues a trend noted inthe previous business outlook survey.

Fifty-one per cent of surveyed businesses said they expected to have more employees over the next 12 months, compared to 15 per cent who expected lower employment. The number of firms planning to hire more is now at its highest level since late 2014, when oil prices began their precipitous decline.

An improving sales outlook from surveyed businesses has been fuelled by "an expected rebound in energy-related activity," said the report, as well as "favourable effects of the weaker Canadian dollar for exports and the tourism sector."

"Meanwhile, some firms believe that activity in sectors experiencing robust growth (such as housing and automobiles) could soon level off," said the report.

Canadian businesses expect higher commodity prices to increase costs, reported the bank.

"A few also cited regulatory factors, such as cap-and-trade policies in Ontario and the carbon tax in Alberta, as contributing to their input price growth."

The survey offers "plenty of signs that the worst of the oil price shock is behind the Canadian economy," wrote Robert Kavcic, of BMO Economics in a note.

The Trump question

More and more Canadian firms are optimistic about U.S. economic growth during the Trump administration, which could possibly open new export opportunities. Benefits could also come from the Keystone XL pipeline and possible U.S. infrastructure spending, the surveyed companies said.

That optimism remains tempered, however, by the possible risks from Trump's unpredictable agenda.

"These risks include increased protectionism, reduced competitiveness of Canadian firms in the event of corporate tax cuts in the United States, and possible delays in the implementation of pro-growth U.S. policies," said the report.

Interest rates likely to remain low

The Bank of Canada is "undoubtedly pleased with today's report," wrote TD Economics senior economist Brian DePratto, adding that "it may be reasonable to expect solid economic momentum as we head into the remainder of 2017. "

Still, the bank is "not likely to change the dovishtone of recent communications," wrote DePratto, referring to the bank'sposition on interest rates.

In monetary policy circles, "dovish" implies being in favour of lower rates. It's the opposite of "hawkish," which is the term for those who favour higher rates.

"Until intentions begin translating into actual investment, Bank of Canada officials appear likely to downplay today's [business outlook survey] and the recent improvement in the Canadian economic data more broadly," wrote DePratto.

The Bank of Canada will release its next interest rate decision on April 12. All 12 economists surveyed by Bloomberg expect the bank to keep interest rates steady.