A new poll conducted by the Bank of Canada has found that Canadian companies remain optimistic about future sales, business investment and hiring even as the country faces mounting economic uncertainties.
The central bank’s latest business outlook survey — its quarterly poll of about 100 leading companies — found that overall business sentiment in Canada has stayed positive and is today above historical averages. But despite the still-optimistic outlook, a number of respondents predicted that some moderation is ahead as the economy shifts to a more sustainable pace of economic growth after 2017’s exceptional growth, which saw Canada outpace the G8 group of countries.
“Business sentiment continues to be positive, supported by healthy sales prospects,” the Bank of Canada wrote in its report. “Due to recent strong demand, capacity and labour pressures are evident in most regions.”
The survey found that companies anticipate sales will grow at a faster pace over the next 12 months, but it noted that several companies anticipate a moderation of activity following the strong performance of the past year. Senior managers at the polled companies also said they anticipate stronger sales overall from increasing U.S. demand. However, some also said they expect protectionism and reduced competitiveness to limit the benefits they see from the improving American economy south of the border.
Canada has faced considerable uncertainty surrounding the current negotiations of the North American Free Trade Agreement (NAFTA), and, more recently, the potential spillover effects of a growing trade dispute between the world’s two largest economies: the U.S. and China.
In recent months, business leaders have urged governments in Canada to take steps to ease the potential sting from new competitive disadvantages caused by recent tax and regulatory reforms in the U.S. The Bank of Canada survey found that most firms had yet to see negative effects from recent U.S. policy announcements or the related uncertainty. It also found that most firms don’t expect a clear impact over the coming 12 months.
