MNI DATA IMPACT: BOC Survey Points To Softening Biz Sentiment>

By Courtney Tower 

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

Spring 2019 Business Outlook Survey published Monday: 

     - Firms in a Bank of Canada survey taken Feb. 19-Mar. 13 expect 

softer sales over the next year than in the last 12 months, softer but 

still positive. The BOC survey indicator decreased from being strongly 

positive in the winter survey to now being slightly negative, 

"suggesting a softening in business sentiment." This is the first 

quarterly turn to negative in the indicator since the third quarter 

2016. 

     - There is less optimism about demand, with firms citing more 

uncertainty in the Western Canada energy sector, continued weakness in 

housing activity in some regions, and continuing concerns about global 

trade tensions. Expectations for United States' economic growth remain 

positive but are down from what the Bank calls "elevated levels" of 

recent surveys.

     - Inflation expectations have declined, with 64% of respondents 

expecting inflation between 1% and 2% over the next two years, sharply 

up from 35% in the winter survey, and the highest percentage since the 

second quarter 2017. Overall, however, inflation expectations remain 

within the 1%-3% BOC control range. 

     - Intentions are to increase investment on machinery and equipment 

over the next 12 months, especially among services firms. There are 

weaker investment intentions among firms exposed to the energy sector, 

particularly in the oil and gas-rich Prairie Provinces. Uncertainty 

around future pipeline approvals plus recent Alberta production 

curtailment are softening investment intentions. The balance of opinion 

on hiring intentions for the next 12 months is down slightly from the 

winter survey but remains positive. Plans to hire are said to be 

widespread across all regions, most evidently among services firms. 

     - Indicators of labor shortages have eased although they are still 

more intense than they were 12 months ago. The province of Quebec holds 

a concentration of such views while in most other regions the intensity 

of labor shortages is roughly the same. The share of firms reporting 

that labor shortages are limiting their ability to meet demand has 

declined to below the historical average. Meanwhile, credit conditions 

eased marginally over the past three months. A separate Senior Loan 

Officer Survey for the first quarter this year reports largely unchanged 

mortgage and non-mortgage lending conditions for households. 

     - MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com

     [TOPICS: M$B$$$,M$C$S$]