A survey by the Bank of Canada has stated that businesses in the country are expected to witness a moderate rise in sales in the coming year. However, the survey also disclosed issues such as the continued slump in foreign demand owing to trade tensions, and increased prevalence of regional differences across Canada.
According to the results from the quarterly business outlook survey of the central bank, the sentiment in central Canada has been found to be largely positive, while the Prairie Provinces such as Manitoba, Alberta, and Saskatchewan were witnessing a period of widespread weakness following a rise in positive sentiment during the survey conducted in June.
In addition, business sentiment has also been impacted by poor expectations from the U.S. economy in the near future. This can be attributed to a number of businesses in Canada expecting a small recession in the United States in the coming year. Businesses expect restricted sales in Canada as well owing to the slowing U.S economy. According to the Bank of Canada, factors such as recruitment and investments are expected to remain at healthy in all provinces except those which are involved heavily in energy production.
Central Bank Unlikely to Cut Rates Further
The survey on business sentiment was released by the bank a couple of weeks before the scheduled announcement on the central bank’s next decision on overnight interest rates on the 30th of October. The value of the Canadian dollar slid slightly to 76.34 cents of a U.S. dollar following the release of the survey. Consequently, analysts are predicting no cuts in interest rates in the impending announcement.
Out of all the enterprises in the survey, 48 per cent expected sales to grow faster than the preceding 12 months, while 25 per cent predicted sales to slow down. This is an improvement to the figures from the survey in June which displayed a 44 and 21 per cent figure for the same parameters. The survey also noted that businesses expected inflation to be in the lower half of the target range set by the central bank in the next 2 years.
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