(Adds details from report, background)
OTTAWA Oct 7 Canadian companies' hiring and
investment intentions improved modestly in the third quarter,
while resource firms believe the sector may be bottoming out
after prolonged weakness, the Bank of Canada said on Friday.
Expectations of sales growth over the next 12 months also
improved modestly from the weak level seen in the previous
survey, the Bank of Canada said in its business outlook survey.
Still, the balance of opinion suggested that sales growth over
the past 12 months had been flat.
Many resource-related businesses, including oil and gas
companies, said they sense that activity has hit a bottom after
two years of grappling with the impact of lower oil prices.
With the relative stabilization in commodity prices in
recent months, firms now cautiously believe sales will no longer
fall or will increase modestly, the survey said.
The bank surveys about 100 companies across size and
industry and releases the results quarterly. The slight
improvement in tone will be welcome for the bank, but it is
unlikely to change expectations that the central bank will hold
rates at low levels at least through next year.
Only a few firms expected a tangible boost in the near term
from federal government stimulus spending, though some expected
to benefit later as spending ramps up.
Foreign sales were expected to gain momentum in the coming
year, supporting the outlook for exports, which is a key part of
the Bank of Canada's economic view.
The United States, Canada's biggest trading partner,
remained the main driver of firms' positive prospects for
exports, even though businesses expect U.S. growth to be slow
The survey said this view was often related to uncertainty
surrounding the outcome of the U.S. presidential election next
month. Some firms said they had noticed recent softness in
demand from U.S. clients due to that uncertainty.
Employment intentions improved from the low levels seen in
recent surveys, with close to half of companies in the survey
saying they intended to add positions over the next year.
Indicators of labor shortages moved up, suggesting that
while there is still substantial slack in the labor market, it
may have leveled off.
Firms' intentions to invest in machinery and equipment also
rose, though the scale of investment appears limited overall,
the survey said.
Although capacity pressures were roughly unchanged, they
were more widespread among firms benefiting from low commodity
prices and the weaker Canadian dollar.
(Reporting by Leah Schnurr; Editing by Phil Berlowitz)