MNI POLICY: BOC Business Survey Sees Broadening Rebound

The Bank of Canada's first-quarter business survey showed some upbeat signs of a broadening recovery as more owners adapt to health restrictions, although with close-contact service firms facing major weakness.

Many firms are benefitting from from stronger domestic and U.S. demand and the balance of opinion on investment plans grew to a record high in the survey published Monday.

"Many firms consider the impacts of the pandemic on their activities to be behind them," said the Business Outlook Survey gathered Feb. 16-March 8, a period when many local governments were relaxing health restrictions again before the third wave hit and led to new lockdowns. "The recovery remains uneven, with firms tied to high-contact services facing ongoing challenges."

About two-thirds of companies have restored their pre-pandemic level of sales, up from 52% and 38% in the last two quarterly reports. Still, one fifth of firms said sales won't return to pre-Covid levels in the next year, which the BOC said suggested a "protracted" job market recovery.

Expectations of weak inflation receded, with just 37% of firms seeing CPI of 2% or less. The BOC's survey of consumer expectations showed households expected inflation of 2.1%.