E Canadian Firms Are Keen To Invest, But Are Worried About Future Trade Barriers

On balance, the Bank Of Canada’s latest “Business Outlook Survey” was quite positive. However, the surveyed firms are clearly worried that they may be facing a rocky and possibly more volatile future primarily because of the Trump Presidency.

Nonetheless, Canadian business opinion relating to the short-term outlook was fairly upbeat in the first quarter of 2018.

It should be noted that the Bank of Canada survey was collected before the emergence of greater optimism about NAFTA negotiations and also before concerns about a global trade war became more prominent.

With respect to some of the key survey questions, the balance of opinion on future sales and employment improved, while equipment investment plans remained at an above-average level.

Canadian firms also expect sales growth to accelerate over the next year, a perspective which was reinforced by improved foreign orders. Though Canadian firms were concerned about trade protectionism, on balance they still expected U.S. demand to boost sales. Capacity pressures diminished somewhat in Canada compared to the last survey, although capacity problems still were significant for 47% of respondents.

In the survey Canadian firms expected their costs to increase at a faster pace than last year largely due to new carbon taxes and higher minimum wages. The same firms expected to face tighter credit conditions in the year ahead. They were also expecting higher inflation, with 56% of respondents anticipating annual inflation to be above 2% over the next two years.

 

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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