MNI DATA IMPACT:BOC Survey Shows Modest Sentiment Improvement>

By Greg Quinn

     OTTAWA (MNI) - The Bank of Canada said there was a slight 

improvement in its latest quarterly business sentiment survey, one 

of the last scorecards on the economy before a July 10 interest-rate 

decision. 

     Investment and hiring plans "continue to be healthy" and companies 

expect modest export gains and strong domestic sales, according to the 

survey published Friday in Ottawa. 

     The balance of opinion on future sales growth climbed to a two-year 

high of 23% in the second quarter. The measure subtracts the share of 

respondents seeing a slowdown from those calling for faster gains.

     Two-thirds of executives said the inflation rate will be at or 

below the BOC's 2% target over the next two years, little changed from 

the last survey. 

     The more upbeat tone came from companies anticipating strong orders 

in Ontario and Quebec and from housing projects, while some firms see 

global trade tensions as a drag. Bank of Canada officials have kept a 

neutral tone on interest rates, saying the economy is emerging from a 

weak patch and still faces uncertainty around escalating trade tensions. 

     The Business Outlook Survey's overall indicator rose to 0.19 in the 

second quarter from -0.65 in the first quarter.

     "Following some softness in past sales, businesses expect an 

increase in sales growth in the next 12 months, backed by healthy 

domestic and foreign demand," the BOC's report said. "Weakness tied to 

the Western Canadian oil industry and global trade headwinds continue to 

hold back future sales."

     There was also a rebound in the percentage of executives who said 

they would struggle to fill an unexpected rise in demand. That measure 

climbed to 42% in the second quarter. The previous report showed a 

drop to 31% from 56%. More goods-producing companies outside the energy 

industry plan to increase investment, the report said.

     The BOC surveyed about 100 business leaders between May 7 and June 

3. The companies are chosen so that they represent the composition of 

gross domestic product.

     - MNI Ottawa Bureau; +1-613-314-9647; greg.quinn@marketnews.com

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