Correct: MNI 5 THINGS:BOC Biz Survey Points to Cont'd Optimism

--Correcting 2nd Graph (Part Related to Sales Growth)

By Courtney Tower

     OTTAWA (MNI) - Following are the key points from Bank of Canada's Autumn

2018 Business Outlook Survey published Monday:

     - Experiences and intentions of senior management of 100 Canadian business

firms, in a survey taken August 23-September 17, before the US-Mexico-Canada

(USMCA) trade agreement was announced on September 30, "indicate that near-term

business prospects continue to be robust." The survey added, "strong demand and

elevated capacity pressures" support both investment and hiring intentions. As a

general overview, the BOC's Business Outlook Survey Indicator "remains at almost

record levels, consistent with widely held positive views on most indicators,"

the report said. The BOS indicator was 2.83, down from 3.07 in the summer

survey.

     - The survey builds on improved sales over the past 12 months, with both

foreign and domestic demands higher on a widespread basis, the report said. The

balance of opinion on past sales growth moved down but remains positive. On

balance (15%), firms expect a higher rate of sales growth over the next 12

months. One contrary point is that "the outlook continues to be subdued for

firms affected by housing and housing-related demand." Businesses on balance

expect foreign sales to grow at a higher rate over the next 12 months than in

the year past. A majority of firms expect higher sales in the United States,

while some cited U.S. trade protectionism as a constraint on their sales. The

survey followed imposition of U.S. tariffs on Canadian steel and aluminum

imports, and similar retaliatory measures from Canada.

     - Investment intentions for the next 12 months rebounded. A majority of

firms, rather than investing just to maintain existing ventures, now is

investing to expand production or improve efficiency, with some focussing on

expanding their information technology capabilities, the survey said.

     - After increasing modestly over previous surveys, the balance of opinion

on employment intentions receded to 39% from 51% in the previous survey.

However, hiring intentions "remain(s) positive across all regions and sectors."

Firms frequently reported anticipated sales growth "and are often operating at

capacity," the report said. The intensity of labor shortages moved to "a

near-record high," with reports of more intense labor shortages being most

prominent in the province of Quebec while being still modest in the three

Prairie Provinces of Alberta, Saskatchewan and Manitoba. Most difficulty was

found in finding workers for occupations tied to construction, transportation,

and information technology.

     - Following recent surveys, input prices are expected to rise at a faster

pace over the next year. Many businesses report upward pressure from tariff

increases, especially those on steel and aluminum, as well as higher prices for

various commodities. Several firms are planning to pass on higher tariff costs

to customers. The balance of opinion for output prices was unchanged at 12%,

however. The balance for input prices edged down to 26%. Overall, inflation

expectations have edged down, although firms report rising labor costs, strong

economic growth and tariff increases as the main reasons for inflationary

pressures.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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