Categories: Economy

Canada companies see higher gross sales, fret about potential US measures: central financial institution survey


By Promit Mukherjee and David Ljunggren

OTTAWA, Jan 20 (Reuters) – Canadian companies see improved demand and gross sales within the coming 12 months, largely fueled by price cuts, however are involved in regards to the potential harm from promised U.S. insurance policies, the Financial institution of Canada mentioned on Monday.

The Financial institution’s fourth quarter enterprise outlook survey mentioned general enterprise sentiment remained subdued. The survey is carefully watched by the BoC because it offers a perspective on funding and hiring intentions of corporations.

The enterprise outlook indicator – a metric of prospects beneath present financial situations – improved to -1.18, its finest standing within the final 5 quarters however continued to be beneath common.

Solely 15% of companies are actually planning for a recession in Canada over the approaching 12 months, down from 16% within the third quarter, it mentioned.

“After a interval of weak demand, companies count on their gross sales development to enhance over the approaching 12 months. This expectation is basically pushed by latest rate of interest reductions and the anticipation of additional cuts forward,” it mentioned.

The outlook was carried out from Nov 7-27, earlier than the financial institution’s most up-to-date 50 foundation level lower on Dec 11. U.S. President Donald Trump promised on Nov 25 to impose a 25% tariff on all Canadian imports when he took workplace.

A separate on-line ballot of enterprise leaders the central financial institution carried out in December confirmed widespread uncertainty in regards to the potential fallout of U.S. insurance policies, with 40% of respondents saying they anticipated the consequences to be detrimental.

The financial institution has lower charges by a complete of 175 foundation factors since June in a bid to spark a weak financial system and counter rising unemployment. Charges had hit a two-decade excessive of 5% earlier than the financial institution began easing coverage.

“Companies’ intentions to extend funding over the approaching 12 months have turn into extra widespread and are properly above their historic common,” the BoC mentioned within the survey.

But it surely cautioned that uncertainty linked to the U.S. commerce coverage was holding again corporations from committing investments, though the vitality sector was doubtless an exception.

Firms reported that over the following 12 months they anticipate their promoting costs will develop however improved demand situations will permit them to move by way of the price will increase and restore margins.

The survey famous {that a} larger-than-normal share of companies plan maintain employment ranges roughly flat over the approaching 12 months. Nevertheless, in addition they don’t see want to cut back workers.

Canada’s financial system added practically 4 instances the variety of jobs forecast in December and reached its highest quantity in nearly two years, However unemployment has continued to be at traditionally excessive ranges.

(Reuters Ottawa editorial)

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