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MNI BRIEF: Fed's Powell Sees 'Couple' More Years of QT
MNI DATA IMPACT: BOC: Firms Near Capacity, Investment Slows>
By Greg Quinn and Anahita Alinejad
OTTAWA (MNI) - Canadian businesses have little room to handle fresh
demand as trade tensions ease, while also reporting the lowest
investment plans in more than three years amid slower sales forecasts, a
Bank of Canada survey showed.
The Business Outlook Survey's summary indicator climbed to +0.7
from +0.4 in the third quarter and -0.1 in the second, the Ottawa-based
central bank said Monday from Ottawa. It's the last major report
expected from the BOC before a Jan. 22 interest-rate decision, where
investors predict Governor Stephen Poloz will hold the G7's highest
policy interest rate at 1.75%.
"Business sentiment is broadly positive" outside of Canada's
western prairie provinces, the BOC said, where energy companies are
struggling. "Indicators of capacity pressures suggest that economic
slack has been absorbed and that labour markets have tightened," outside
of that region, the report said.
The tone of the report mirrors Poloz's view the economy is around
full capacity and inflation will hold around his 2% target. The BOC's
new consumer outlook survey published Monday backed that up, showing
households expected inflation of 2.1% in the fourth quarter and 2.2%
around the end of this year.
More companies also reported they would have trouble meeting rising
demand for a third consecutive quarter, the outlook survey showed.
Still, some of the most prominent figures in the business report
showed marginal weakness. The balance of opinion on future sales growth
fell to 11 from 23. The measure subtracts the share of respondents
seeing a slowdown from those calling for faster gains.
Investment opinions declined to 11 from 28, the lowest in 3-1/2
years, the business survey showed. That was somewhat countered by a
rebound in hiring plans, a relief given a plunge in November's job
report before a partial rebound in December.
The share of executives seeing the inflation rate at or below the
BOC's 2% target over the next two years fell to 61% from 66%.
The consumer survey showed imbalances around household finances
that have deterred the BOC from matching a wave of global interest-rate
cuts remains. The data back to 2014 showed a pattern of families
expecting spending growth to exceed income gains, a gap that widened in
fourth quarter figures.
Consumers also saw home prices running much faster than overall
inflation around Toronto and Vancouver, where lawmakers have stepped
into curb speculation and Poloz warned last week he's watching for
signs of froth to emerge again. Ontario prices were seen gaining 5.1%
and British Columbia prices by 4.8%.
The BOC surveyed about 100 business leaders between Nov. 13 and
Dec. 9. The companies are chosen so that they represent the
composition of gross domestic product. The consumer survey was done from
Nov. 11 to Nov. 29 and is based on a rotating panel of about 2,000
- MNI Ottawa Bureau; +1-613-314-9647; firstname.lastname@example.org
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