OTTAWA, Oct 10 (Reuters) - Canadian companies expect a modest improvement in business activity over the next 12 months but are split over whether the weaker Canadian dollar will boost input prices, a Bank of Canada survey showed on Friday.
The central bank's quarterly business outlook survey said businesses cited tangible signs of improving U.S. demand. They were generally more optimistic about foreign rather than domestic demand, it added.
Although companies expect input prices to increase at a somewhat higher pace over the next 12 months, they are split over the impact of the depreciation of the Canadian dollar.
"Some firms consider that the effect has already taken place, while others are still anticipating some impact on the prices of imported inputs," the survey said.
Some 59 percent of firms expected inflation over the next two years to be in the 1 to 2 percent band, down from 64 percent of those surveyed in the second quarter. The number that predicted inflation would be in the 2 to 3 percent band rose to 37 percent from 30 percent.
Separately, a Bank of Canada survey of senior loan officers showed continued easing in overall business lending conditions in the third quarter. (Reporting by David Ljunggren; Editing by Peter Galloway)