Bank of Canada witnesses strongest business outlook

Bloomberg

Canadian business leaders reported the strongest outlook since 2011 including record hiring plans, according to a central bank survey.
The overall Business Outlook Survey Indicator — an aggregate gauge — measured 2.81, up from 0.73 in the last report, according to the Bank of Canada’s quarterly Business Outlook Survey published in
Ottawa.
Results for nearly all survey questions were above historical averages and the positive outlook is also more widespread across different industries and regions of the
country, it said.
“This result provides clear evidence of a generalized improvement in business sentiment” the bank’s report said of the rise in the summary indicator.

Key Points
The balance of companies looking to make new investments edged down but ‘remains elevated,’ according to reports, while the overall view of future sales growth was the highest since 2014.
The difference between those expecting faster sales growth and those expecting lower sales growth at 31 percentage points. The share of businesses expecting an increase in future sales growth was 50 percent, versus 19 percent who see a decline. The balance of opinion on hiring intentions rose to 58 percentage points, the highest on record
The share of companies expected to increase investment in machinery and equipment was 48 percent in the survey, while those projecting a decline was 19 percent. The 29 percentage point balance of opinion remained “elevated,” close to 35 percent in the last report that was the highest since 2010
The survey may give insight into why Governor Stephen Poloz switched this month to signal he’s prepared to raise interest rates. Swaps trading suggest investors are placing about a 70 percent chance of a rate hike at the central bank’s next decision July 12.