OTTAWA (Reuters) - The negative effects of lower oil and commodity prices have caused business sentiment in Canada to deteriorate over the last three months, though non-commodity exporters plan to boost their investment spending, the Bank of Canada said on Monday.
On a national basis, investment and hiring intentions have fallen to their lowest levels since 2009, the central bank’s quarterly Business Outlook Survey found.
“Yet, in response to stronger foreign demand, exporters not tied to commodities plan to increase their investment, supported by the boost to competitiveness from the depreciation of the Canadian dollar,” it said.
The release was the last Bank of Canada event before its Jan. 20 interest rate decision, and economists had looked to it for clues as to whether in the bank’s view non-commodity growth would be enough to offset continued troubles in oil and commodities.
For hiring intentions, the firms planning higher employment continued to outnumber those expecting a smaller workforce, but the margin declined to 12 percentage points from 28 points in October.
The report also said plans to cut staff were more widespread and not confined to commodity-producing sectors and regions.
Nonetheless, it found virtually unchanged expectations of future sales growth, with 47 percent expecting greater sales growth and 31 percent foreseeing less.
A separate survey of senior loan officers found that overall business lending conditions had tightened slightly during the fourth quarter but that this was almost exclusively concentrated in the oil and gas sector.
Reporting by Randall Palmer and Leah Schnurr; Editing by Andrea Ricci