(Reuters) — The hiring intentions of Canadian businesses were at a record high in the second quarter, and their outlook on sales and financing were upbeat, according to the Bank of Canada’s Business Outlook Survey.
The central bank's second-quarter survey, which interviews senior management from 100 firms across the country, showed plans to hire more staff over the next year were widespread across all regions and sectors, consistent with stronger-than-expected employment data for June.
"Firms generally expect to hire staff to accommodate prospects for growth or to support plans for expansion," the bank said.
Business reported an easing of credit conditions during the quarter, bringing the balance of opinion on credit conditions — the percentage that reported tightening minus the percentage that reported easing — to a record low.
In another sign the economy is heating up, the share of firms that reported some difficulty in meeting an unexpected increase in demand rose to 46 per cent, the highest since 2000, although those that expected "significant" difficulty meeting demand was low at five per cent.
The balance of opinion on future sales — the percentage of firms expecting faster growth minus the percentage expecting slower growth — rose to 20 in the second quarter from 13 in the first. Companies in Western Canada were more upbeat on sales due to strong demand for the commodities produced in that region.
On the inflation front, 80 per cent expect the annual inflation rate to remain within the Bank of Canada's one to three per cent target range over the next year, although a greater portion of them see the rate in the upper end of that range.
The survey results were overall more upbeat than in the previous quarter and suggest the central bank may have reason to resume tightening interest rates later this year.
The bank has held its key policy rate steady at one per cent since last September following three successive hikes to lift it from emergency lows.
It is widely expected to hold rates steady again on July 19 but could signal plans to resume tightening in the face of a domestic economy that is heating up.
But the outlook in the United States and Europe is highly uncertain and some market players think that will make Bank of Canada’s governor Mark Carney shy away from raising rates for as long as possible.