Bloomberg News

Business Sales Optimism Rebounds in Canada Bank Survey

January 14, 2013

Canadian businesses reported a rebound in optimism about future sales at the end of last year, a quarterly central bank survey showed.

The balance of opinion for sales over the next 12 months rose to 16 percentage points in the Bank of Canada’s survey of about 100 executives, after falling to zero in the prior report. The balance of opinion on sales over the past 12 months was negative 2, the first reading below zero in more than two years.

“Uncertainty continued to temper expectations for business activity,” the Ottawa-based bank said today in its survey, which was taken Nov. 19 to Dec. 13.

The bank will probably keep its key interest rate at 1 percent at its Jan. 23 decision, where it’s been since September 2010, according to economists surveyed by Bloomberg News. Senior Deputy Governor Tiff Macklem said in a speech last week that while economic momentum has slowed, it will accelerate later this year.

The percentage of companies reporting they would have “some” difficulty meeting an unexpected increase in demand dropped to 28 percent in the latest survey from 44 percent three months ago.

The balance of opinion on new investment over the next 12 months rose to 20 percent from 8 percent, with the central bank finding that “few firms cited spending plans related to major new projects.” On employment, the balance of opinion increased to 28 percent from 26 percent.

The central bank’s main goal is to keep inflation in the middle of a 1 percent to 3 percent range, and 96 percent of those surveyed said the consumer-price index will be in that range over the next two years. Inflation fell below the target range in December, advancing 0.8 percent from a year earlier, Statistics Canada said Dec. 21.

Executives said that credit conditions eased in the fourth quarter, with a balance of opinion of negative 7 percentage points.

A separate survey of lending officers had a balance of opinion of negative 3.4 percentage points, also suggesting easier credit conditions. That measure has shown easing in each quarter since the end of 2009.

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net


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