Expect “caution” to be the watchword when the Bank of Canada releases its business outlook and senior loan officer surveys Monday.
The surveys were done in the spring, and were thus caught up in the market turmoil at the time, which no doubt played a role in the results.
“Canadian businesses are forecast to have remained in a cautious mood through the early days of summer,” said economists at Toronto-Dominion Bank.
“The survey period – running from late May into the middle of June – will have captured the recent deterioration in financial conditions (including lower commodity prices) and the backup in rates,” they said.
“While pockets of the U.S. economy are looking stronger, the outlook remains shrouded with downside risks amid fiscal austerity and weakness elsewhere in emerging markets and within Canada’s domestic economy. This uncertainty is also expected to keep investment and hiring intentions equally subdued.”
That’s not to suggest there won’t be any change.
“The economic data released over the period were generally decent, as employment surged and GDP growth was surprisingly solid, likely contributing to a somewhat firmer underlying outlook,” said senior economist Benjamin Reitzes of BMO Nesbitt Burns.
“Sales expectations look to pick up modestly, building on the improvement in the prior two quarters, with the softer Canadian dollar providing support,” he added in a research note.
“Firming U.S. growth in the second half of the year should buoy expectations as well, though restrained domestic demand will likely continue to weigh. Investment intentions softened in the spring, and could remain challenged given the persistently uncertain global economic outlook.
“Meantime, job growth has been volatile but the huge gain in May is hard to ignore. Look for hiring intentions to be little changed, close to the survey’s long-term average and consistent with moderate growth.”