April 6, 2015 / 2:43 PM / 4 years ago

Cheap oil weighs on firms' outlook: Bank of Canada survey

Pumpjacks taken out of production temporarily stand idle at a Hess site while new wells are fracked near Williston, North Dakota November 12, 2014. REUTERS/Andrew Cullen

OTTAWA (Reuters) - Lower oil prices have dampened the overall sales outlook for Canadian companies and have weighed on their investment and hiring intentions, though many expect to see a benefit from a stronger U.S. economy, a Bank of Canada survey showed on Monday.

The central bank’s quarterly business outlook survey showed company expectations for sales growth declined for the second quarter in a row, suggesting they see sales increasing at about the same rate over the next 12 months as in the past year.

Lower prices for oil, which is a major export for Canada, significantly dampened the near-term outlook for companies in the energy sector, the survey showed, while there was also some spillover into other sectors.

But companies’ outlook for the economic recovery south of the border was generally strong, with the majority expecting the U.S. strength to support sales.

Companies said they will invest about the same amount in machinery and equipment as they did over the past year, with weakness in investment intentions seen in the goods sector and companies that were negatively affected by the drop in oil prices.

Plans to invest were more widespread in the services sector and among companies based in Central Canada, which has less exposure to the energy sector than Western Canada.

While overall intentions to add employees were positive, the balance of opinion fell to its lowest since 2009 and companies tied to the energy sector planned to reduce their workforce.

A separate survey of senior loan officers showed business lending conditions were broadly unchanged during the first quarter, though they were tighter for the oil and gas sector.

Reporting by Leah Schnurr; Editing by Peter Galloway

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