Last week's blow-the-doors-off employment report from Statistics Canada ignited speculation that Mark Carney might raise interest rates sooner than anticipated, and a report Monday morning from the Bank of Canada may well cement that view.
At 10:30 a.m. in Ottawa, the central bank will release its quarterly Business Outlook Survey, a poll of executives that is the closest thing to a real-time snapshot of what companies are seeing on the ground, and how that is shaping their hiring and investment plans.
Mr. Carney, the Bank of Canada governor, is likely still several months away from pulling the trigger on his first interest-rate hike since September, 2010 – even after a net 82,300 jobs were created in March, the most in three-and-a-half years, and despite the fact he indicated last Monday that policy makers are more confident in the economy's short-term prospects.
But the bank's next decision is April 17, a day before it publishes a quarterly economic forecast.
Monday's survey will be crucial for Mr. Carney and his crew as they figure out just how much to tweak their policy "bias" to reflect recent signs of strength in Canada and the U.S., and a tentative sense that the Euro zone crisis is becoming more manageable.
The last poll, released in January, was a mixed bag, though generally negative since it was conducted at a particularly low point for the European debt saga.
Business confidence was more fragile at the end of 2011 than it had been in almost three years, the survey revealed. Plus, volatility in financial markets and global uncertainty had led some executives to delay or alter their investment plans. At the same time, 54 per cent said they still planned to add staff over the next year, a result that seems to have been borne out by the March job gains, and 29 per cent said they were grappling with labour shortages – a three-year high.
The survey is typically finished by the middle of the month before it's released. That means the new one will have been taken before the Harper government's March 29 budget that included a host of measures aimed at supporting business investment, and before Mr. Carney urged exporters last Monday to "refocus, retool and retrain" in order to seize opportunities in emerging markets.
Still, recent surveys by accounting firm Deloitte Touche and Chartered Accountants of Canada indicate that across the country, the improving data in both Canada and the U.S. are making chief financial officers and other corporate accountants bullish on profits and sales. Those polls found CFOs are looking at more hiring, capital spending and mergers-and-acquisitions.
If the central bank's survey echoes the others, expect it to be followed by a more hawkish rate statement and forecast.