UPDATE 1-Bank of Canada Q3 survey says hiring, investment intentions rose

Fri Oct 7, 2016 11:00am EDT
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(Adds details from report, background)

OTTAWA Oct 7 (Reuters) - Canadian companies' hiring and investment intentions improved modestly in the third quarter, while resource firms believe the sector may be bottoming out after prolonged weakness, the Bank of Canada said on Friday.

Expectations of sales growth over the next 12 months also improved modestly from the weak level seen in the previous survey, the Bank of Canada said in its business outlook survey. Still, the balance of opinion suggested that sales growth over the past 12 months had been flat.

Many resource-related businesses, including oil and gas companies, said they sense that activity has hit a bottom after two years of grappling with the impact of lower oil prices.

With the relative stabilization in commodity prices in recent months, firms now cautiously believe sales will no longer fall or will increase modestly, the survey said.

The bank surveys about 100 companies across size and industry and releases the results quarterly. The slight improvement in tone will be welcome for the bank, but it is unlikely to change expectations that the central bank will hold rates at low levels at least through next year.

Only a few firms expected a tangible boost in the near term from federal government stimulus spending, though some expected to benefit later as spending ramps up.

Foreign sales were expected to gain momentum in the coming year, supporting the outlook for exports, which is a key part of the Bank of Canada's economic view.

The United States, Canada's biggest trading partner, remained the main driver of firms' positive prospects for exports, even though businesses expect U.S. growth to be slow overall.   Continued...