OTTAWA (Reuters) - Canadian companies plan to hire more staff in the coming year, particularly in the West, but an increasing number of firms are pessimistic about the rate of sales growth, the Bank of Canada’s winter business survey showed on Monday.
“The global economic outlook and concerns about demand continue to weigh on firms’ expectations for business activity,” the report said.
Despite the economic concerns, the balance of opinion on employment rose from three months ago, particularly in the Prairies region, which is benefiting from the global commodities boom.
Nearly three in 10 firms said labor shortages were currently restricting their ability to meet demand, with an increase in the West mostly offset by a decline in Central and Eastern Canada.
The number of firms planning to increase staffing levels rose 2 percentage points to 54 percent, while those planning a smaller workforce fell 5 points to 9 percent.
Investment intentions remain positive but little changed, with those planning to increase capital spending outnumbering those intending to cut by two to one.
Many western and commodities-linked firms reported robust sales over the past 12 months and now expect lower sales growth.
The balance of opinion on future sales growth fell for the second consecutive survey and turned slightly negative. Forty-one percent see sales growth falling, 37 percent see it rising and 22 percent see steady growth.
The survey reported little change in opinion on capacity pressures, with 46 percent saying they would have difficulty meeting an unexpected increase in demand.
Inflation expectations have now settled down. Those expecting it to exceed the Bank of Canada’s target range of 1 to 3 percent fell to 4 percent of firms from 15 percent nine months ago. Ninety-two percent of respondents expect inflation to be in the target range.
A fourth-quarter survey of senior loan officers indicated almost no change in overall business lending conditions, following several quarters of easing credit conditions.
A net easing in non-price conditions of business lending continued but hardly any change was reported in price aspects of lending.
“These outcomes are consistent with the Bank (of Canada) remaining on the sidelines for an extended period of time,” TD Securities economist David Tulk said in a note to clients.
(Editing by Jeffrey Hodgson and Rob Wilson)
This story corrects to nine months from six months in paragraph 10