Tuesday, 10 January 2012

Business outlook weakening: BoC survey

Business outlook weakening: BoC survey
Financial Post January 9, 2012
OTTAWA — Global economic uncertainty and concerns over demand for their products are continuing to cloud business expectations in Canada, with the majority of companies forecasting lower sales over the next year, according to the Bank of Canada’s winter survey, released Monday.
While that marks the second negative outlook in a row, it’s the first time the central banks’s survey reading on future sales has fallen below zero since the start of 2009, when Canada was still in recession.
“Overall, the weak U.S. economic outlook, concerns about adverse effects from the situation in Europe and an expected slowing in household spending were among the factors dampening sales prospects,” the central bank said in its survey, released Monday.
The survey found that 41% of firms said they expect sales to slow over the next 12 months, while 37% are forecasting growth and another 22% expect sales to be the same as they were in the past 12 months.
The Bank of Canada said “the balance of opinion on futures sales has turned slightly negative, as firms in Western Canada expect sales growth to slow from the recent strong pace and those elsewhere generally expect growth to remain modest.”
“Firms still expect to increase investment and employment, although the balances of opinion remain below the high levels reached earlier in the year.”
Meanwhile, the BoC survey showed little change in inflation expectations among business, while firms said they “no longer report a net easing in credit conditions.”
Avery Shenfeld, chief economist at CIBC World Markets, said “there was no material change in the two measures the bank views as signs of inflation pressures — the share of firms reporting difficulties meeting demand increases or finding workers — with both of those results being in line with levels seen during previous periods of contained inflation.”
“All told, not much different than the last survey, with a slight tip towards more caution in sales growth expectations, as one would have expected.”
In a separate survey, the Bank of Canada said responses from senior loan officers showed “almost no change in overall business-lending conditions during the fourth quarter of 2011.”
“This follows several consecutive quarters of easing credit conditions for business borrowers,” the BoC said.

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