Speaking in Winnipeg in October, Tiff Macklem, the Bank of Canada's senior deputy governor, had this to say about Canadian business investment: "Recent investment performance has been solid but not spectacular. We must do better than solid."
Mr. Macklem must be disappointed with the data he's seen since. We aren't doing better than solid.
In the second quarter of last year, 43 per cent of respondents told the Bank of Canada's quarterly business outlook survey that they intended to boost investment spending.
That percentage was little changed over the second half of 2012. And now at the start of 2013, executives appear to be less interested in investing in productivity enhancing machinery and equipment.
In the Bank of Canada's spring business outlook survey, released Monday, 39 per cent of respondents said they planned to increase investment over the next 12 months, compared with 43 per cent in the fourth quarter.
(Twenty-seven per cent said they planned to cut investment, and 35 per cent said it would be the same.)
The survey results herald lacklustre economic growth this year.
With the housing boom spent and government spending in retreat, Canada needs a boost from business investment and exports. And trade isn't coming around, as the value of merchandise imports exceeded the value of merchandise exports for an 11th consecutive month in January.
Taken together, the latest Business Outlook Survey and the trade figures will entrench expectations that the Bank of Canada will leave borrowing costs at their current ultra-low setting into 2014.
Policy makers can do so with little fear of exceeding their inflation target.
Executives reported little change in their ability to meet demand, suggesting they have little reason to raise prices.
Virtually all respondents said they expected inflation would stay within a range of 1 per cent to 3 per cent, which is the central bank's stated comfort zone.
Some 61 per cent of executives said they expected inflation would be between 1 per cent and 2 per cent over the next two years – the most since the fourth quarter of 2009.
Canada's economy isn't stalling, exactly.
The Bank of Canada's Business Outlook Survey includes 100 companies. When polled between Feb. 19 and March 14, half said they expected faster sales growth over the next 12 months. (A quarter of respondents predicted sales would remain the same and 26 per cent said sales would decline.)
In the fourth quarter, only 44 per cent of the companies predicted stronger sales growth.
However, the Bank of Canada says respondents foresaw only "modest" gains. And the prospect of modest increases probably isn't enough to stir the animal spirits of Canada's entrepreneurs and business managers.
For a second consecutive quarter, more businesses said sales declined over the previous 12 months than said sales increased.
Canada's companies aren't making plans to invest because they are licking their wounds.