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BoC's Business Outlook Survey Indicator comes in at -0.6 percent in the first quarter of 2019, suggesting a softening in business sentiment

The Bank of Canada (BoC) reported on Monday its Business Outlook Survey indicator fell from a strongly positive level in the winter survey and is now slightly negative, suggesting a softening in business sentiment.

  • Firms’ expectations for sales remain positive but have softened as several businesses are less optimistic about demand
  • The main headwinds are a more uncertain outlook in the Western Canadian energy sector, continued weakness in housing-related activity in some regions, and tangible impacts from global trade tensions
  • Investment and employment intentions remain healthy outside the Prairies; plans to increase capital spending and add staff are most common among firms in the services sector facing sustained demand
  • The share of businesses reporting capacity pressures has declined to a low level, with some firms pointing to recent additions of capital and labor while others cite a moderation in demand; indicators of labor shortages have also moved down
  • Firms anticipate input and output price growth to stabilize, reflecting ongoing competition, rising commodity prices and fading pressure from tariff-related cost increases. 
  • Inflation expectations have declined but are still concentrated in the Bank of Canada’s 1 to 3 percent inflation-control range
  • Credit conditions eased marginally over the past three months

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