OTTAWA Jan 9 - Canadian companies are more
optimistic about future sales as demand picks up and plan to
boost investment and hiring, but businesses are uncertain about
potential U.S. protectionism and signs of substantial labor
market slack exist, the Bank of Canada said on Monday.
Expectations of sales growth over the next 12 months
improved as the oil price slump has dissipated and demand from
both domestic and U.S. buyers has picked up, the Bank of Canada
said in its business outlook survey.
Signs of future sales, including new orders, were more
widespread than three months ago.
While a weaker Canadian currency promotes tourism and
benefits firms that see less competition from their U.S.
counterparts, "considerable uncertainty" surrounds the
implications of the U.S. election, the survey showed.
"Firms' views ... are divided: some are optimistic about the
prospect of increased infrastructure and military spending as
well as changes in energy policies, while others are more
pessimistic, often because of the risk of increased
protectionism," the central bank said in the report.
While plans to invest over the next 12 months are more
pronounced in central and eastern Canada, "positive investment
intentions are now evident in all regions and sectors,
particularly among exporters," the report said.
Exporters cited the weaker Canadian dollar and U.S. demand
as the most important supporting factors for improving sales
While the balance of opinion points more strongly to hiring
plans and expansion over the next 12 months, resource-related
businesses still have limited hiring and "material excess slack
remains" in regions affected by the slump in the energy sector.
Input and output price growth are expected to accelerate,
allowing firms to begin restoring profit margins, the survey
showed. Some respondents indicated that suppliers are attempting
to stabilize or increase prices following cuts over the past two
years, or pass on anticipated increases in commodity prices.
The ability to pass on increases to customers helped push
inflation expectations up slightly from the low level of the
autumn survey, but inflation expectations remained at the bottom
half of the central bank's inflation-control range.
Credit conditions were little changed, with most firms
saying credit is easy or relatively easy to obtain.
(Reporting by Andrea Hopkins and Leah Schnurr; Editing by