Firms hiring intentions rise for 2012: Bank of Canada

Western provinces most optimistic
By Randall Palmer
||Last Updated: 01/12/2012

(Reuters) — Canadian companies plan to hire more staff in the coming year, particularly in the West, but an increasing number of firms are pessimistic about the rate of sales growth, the Bank of Canada's winter business survey showed on Monday.

"The global economic outlook and concerns about demand continue to weigh on firms' expectations for business activity," the report said.

Despite the economic concerns, the balance of opinion on employment rose from three months ago, particularly in the Prairies region, which is benefiting from the global commodities boom.

Nearly three in 10 firms said labour shortages were currently restricting their ability to meet demand, with an increase in the West mostly offset by a decline in Central and Eastern Canada.

The number of firms planning to increase staffing levels rose two percentage points to 54 per cent, while those planning a smaller workforce fell five points to nine per cent.

Investment intentions remain positive but little changed, with those planning to increase capital spending outnumbering those intending to cut by two to one.

Many western and commodities-linked firms reported robust sales over the past 12 months and now expect lower sales growth.

The balance of opinion on future sales growth fell for the second consecutive survey and turned slightly negative. Forty-one per cent see sales growth falling, 37 per cent see it rising and 22 per cent see steady growth.

The survey reported little change in opinion on capacity pressures, with 46 per cent saying they would have difficulty meeting an unexpected increase in demand.

Inflation expectations have now settled down. Those expecting it to exceed the Bank of Canada's target range of one to three per cent fell to four per cent of firms from 15 per cent six months ago. Ninety-two percent of respondents expect inflation to be in the target range.

A fourth-quarter survey of senior loan officers indicated almost no change in overall business lending conditions, following several quarters of easing credit conditions.

A net easing in non-price conditions of business lending continued but hardly any change was reported in price aspects of lending.

"These outcomes are consistent with the Bank (of Canada) remaining on the sidelines for an extended period of time," TD Securities economist David Tulk said in a note to clients.

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