MNI 5 THINGS: BOC Biz Survey Points to Continued Optimism>

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. Expectations are for 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 (15 percent) 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; email: yali.ndiaye@marketnews.com

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