Bank of Canada poll sees businesses more upbeat, still cautious

Mon Jan 13, 2014 10:30am EST
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OTTAWA Jan 13 (Reuters) - Canadian businesses were hopeful in the fourth quarter of 2013 that sales would increase over the next year and were more upbeat on investment and hiring than in the previous quarter, according to a Bank of Canada survey released on Monday.

But the positive outlook was not shared evenly among the senior managers participating in the bank's quarterly survey. Details of the responses showed that companies benefiting from an improving global economy appeared more encouraged than those relying solely on the domestic market.

"The winter business outlook survey provides some positive signs for the economic outlook, notably for exports and investment, although responses do not yet appear to suggest a significant strengthening," the central bank said in its report.

The bank cited "weak demand and domestic uncertainty" as weighing on some companies as they looked to the year ahead.

The inflation outlook has been a huge concern for the Bank of Canada as the inflation rate has been persistently below the bank's 2 percent target. In the survey, the vast majority of businesses expected the rate to remain within the bank's target range of 1 to 3 percent over the next two years.

Sixty-eight percent saw inflation at the bottom end of that range, between 1 and 2 percent, largely unchanged from 70 percent in the third-quarter survey. Twenty-nine percent expected inflation of between 2 and 3 percent.

Fifty-three percent of companies expected their employment levels to rise, up from 43 percent in the third quarter; and 42 percent expected investments to rise, versus 34 percent previously. (Reporting by Louise Egan; Editing by Peter Galloway)