Skip to main content

Companies cited healthy domestic and foreign demand as well as a low Canadian dollar in the central bank’s quarterly business-outlook survey.

Sean Kilpatrick/The Canadian Press

Canadian firms expect an increase in sales growth over the coming year, a Bank of Canada survey said on Friday, adding to optimism that the economy is recovering from a recent downturn.

Companies cited healthy domestic and foreign demand as well as a low Canadian dollar in the central bank’s quarterly business-outlook survey.

The survey, which the bank said pointed to “a slight improvement” in sentiment after a moderation in the previous quarter, was released the same day as Statistics Canada reported unexpectedly strong economic growth in April.

Story continues below advertisement

“I don’t think you’d want to characterize this as a blockbuster report by any means, but it is significantly more optimistic than what we saw from the survey in the first quarter,” Andrew Kelvin, chief Canada strategist at TD Securities, said by phone.

Of the companies surveyed, 44 per cent expected sales to grow at a faster rate than in the past 12 months, while 21 per cent predicted a lesser rate of sales growth. In the previous survey, the balance was 40 per cent to 34 per cent.

Most of the sales optimism is concentrated in central Canada. The increase in expectations, businesses said, comes despite continuing weakness in the Western Canadian oil industry and continued uncertainty around global trade.

Foreign sales remain positive, spurred by a low Canadian dollar and sustained foreign demand, especially from the United States, respondents said.

The Canadian dollar strengthened to $1.3078 to the U.S. greenback, or 76.46 US cents, after the survey was released.

Despite the optimism, most respondents said they anticipated the U.S. economy would grow more slowly than was expected in 2018, in part because of trade tensions with China.

“I think if you’re looking at a slowing U.S. economy the most natural thing to attribute that to is the trade tensions, just because they are so present in people’s conversations with businesses,” Mr. Kelvin said.

Story continues below advertisement

Canada and China are involved in their own trade dispute that has snagged several agricultural products, including canola, beef and pork in its crosshairs.

The Bank of Canada raised interest rates five times between July, 2017, and October, 2018. It has since stayed on the sidelines citing the economic challenges posed by high levels of household debt, low oil prices and international trade tensions.

The majority of firms surveyed said they anticipated inflation will be in the lower half of the central bank’s 1-per-cent to 3-per-cent inflation control range over the next two years.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter