The outlook of Canadian businesses continues to be positive for the next 12 months, according to a survey by the Bank of Canada.
While still faced with modest growth, strong competition and moderate demand, strength in commodity prices boosted the optimism of senior management at 100 businesses surveyed in the last quarter of 2010. Firms are looking to become more competitive and create new growth opportunities and many hope demand will continue to improve.
Almost one-half (49 per cent) of the respondents said they expect their firm’s level of employment to be higher over the next 12 months while 43 per cent anticipate it will stay the same and only eight per cent predict it will be lower.
“This positive sentiment, supporting firms’ sales expectations and planned investment for expansion, is widespread across all sectors and all regions,” said the Bank of Canada.
In addition, only 16 per cent of firms said they will face shortages of labour that restrict their ability to meet demand. This compares to 20 per cent in the third quarter of 2010 and remains well below average, said the survey.
“An increase in the number of firms in Western Canada reporting labour shortages was offset by fewer reports of shortages among firms in other parts of the country.”
As the recovery advances, firms continue to report higher sales growth over the past 12 months than over the previous 12 months, said the Bank of Canada. On balance, businesses expect sales to increase at a greater rate over the next 12 months, driven by growth in the services sector. Sales expectations are stronger among companies involved in, or benefiting from, commodity-related activity — particularly in oil and mining.
There is also elevated investment in machinery and equipment, found the Bank of Canada.
“Efforts to improve competitiveness by raising productivity or by expanding into new areas, or intentions to expand output in line with strengthening demand, feature prominently among the factors driving firms’ investment intentions,” said the survey.
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