This article was last updated on April 16, 2022
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A survey conducted by the Bank of Canada revealed that Canadian business optimism about future sales and investment has faded over the spring. The report concluding the Business Outlook Survey was published on Monday. Economists did not find the results of report to be surprising, as they claim the level of market uncertainty during the survey period made the results evident. However, the findings have still proved to have further banished any hope for a business-led boost to Canada’s economic performance.
An economist at research firm Capital Economics, David Madani, mentioned in a note to his clients that “softening business sentiment supports our view that Canada’s economy will underperform its potential 2 per cent growth pace over the second half of this year.” The preceding survey for summer 2013 revealed that the balance of opinion regarding future sales has lessened down to 9 from 24 in the previous quarter. The survey concludes its results by subtracting the percentage of firms expecting sales to decline from the percentage that expect sales to improve.
The latest survey revealed that 42 per cent claim that they expect sales to improve in the next year, while 33 per cent said they expected them to decline. The report also found that the balance of opinion on future spending on machinery and equipment has also deteriorated down to 9 in the spring from 12 in the previous quarter. The survey concluded that businesses are viewing the rate of inflation to remain well within the central bank’s target 1 to 3 per cent range.
Policymakers at the central bank are counting on business investment and export growth to play a bigger role in bolstering the economy, taking over from consumers who have been using cheap credit to buy into the housing market. With household debt now at record-high levels, consumers are being urged to reduce their debt loads and pay off all their loans in a short term before interest rates begin rising again.