Canada: Businesses still keen to hire and invest - NBF

Canadian businesses remained upbeat in early 2018, albeit not insensitive about trade-related risks, which is the main message from the Bank of Canada’s latest Business Outlook Survey, explains Krishen Rangasamy, Research Analyst at NBF.

Key Quotes

“Firms expected sales growth to accelerate over the next year, sentiment reinforced by improved foreign orders ─ while concerned about protectionism, firms still expected U.S. demand to boost sales. Capacity pressures diminished somewhat compared to the last survey, although a significant 47% of respondents still had some or significant difficulties in meeting an unexpected increase in demand.”

“Roughly a quarter of respondents said they faced labour shortages, down slightly from the last survey but a high proportion nonetheless. Thanks in part to carbon taxes and higher minimum wages, firms largely expected their costs to increase at a faster pace than last year. They also expected more inflation, with 56% of respondents (the highest since 2012Q1) seeing an annual inflation rate above 2% over the next two years.”

“With capacity and labour pressures remaining elevated, firms are not surprisingly keen to increase hiring and investment outlays.”