Canadian Business Sentiment Soars to New High as Economy Continues to Reopen

As Canada’s vaccine rollout gains even further momentum and public health restrictions continue to be lifted, businesses across the country have become increasingly optimistic about the country’s economic prospects.

The Bank of Canada’s latest quarterly Business Outlook Survey indicator soared to 4.2— the highest on record, suggesting that the growing vaccine uptake is spurring further confidence in the country’s economy. Although there continues to be excess labour supply in the economy, the survey found that the number of businesses planing to ramp up hiring have also surged to a record-high, particularly as expectations of accelerating sales growth increase.

However, businesses are also reporting several sources of growing price pressures— suggesting that consumers may soon experience significantly higher costs for goods and services. Firms’ expectations of an acceleration in wage growth have jumped to historically-elevated levels, and are broad across all sectors and regions. The survey’s respondents noted that the main factors affecting current wage growth are a need to attract and maintain skilled labour, a sharp increase in living costs, as well as a rebound in sales activity.

Canadian businesses are also anticipating a sharper increase in both input and output prices, albeit less widespread than what was reported in the central bank’s spring survey. Firms are expecting their input costs will rise due to ongoing upward price pressures for commodity products such as lumber, energy, and food, as well as increasing freight and shipping fees. As a result, businesses are planning to pass down some of the higher costs to consumers, especially amid strengthening demand conditions.

The Business Outlook Survey found that inflation expectations among Canadian firms soared to a near-record high, as one-third of businesses now forecast inflation will remain above 3% over the next two years, while over half of the survey’s respondents expect price pressures will be consistent with the Bank of Canada’s target range.

The latest quarterly survey results suggest that Canada’s economy is on a strong path to recovery, especially as all businesses surveyed said they are not foreseeing a deterioration in anticipated demand. This may prompt the Bank of Canada to further taper its expansionary monetary policy, after becoming the first among developed economies to already do so.


Information for this briefing was found via the Bank of Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Silver’s Finally Breaking the System | Keith Neumeyer – First Majestic

The Best News for Gold Was the Drop! – Peter Grandich

McEwen Copper: The Los Azules Feasibility Study

Recommended

Altamira Gold Identifies Presence Of Second Mineralized Porphyry Body At Cajueiro

Steadright To Conduct Multi-Phased Exploration At Historic Goundafa Polymetallic Mine

Related News

Canadian Restaurant and Bar Sales Fall by Most on Record in 2020

The Covid-19 pandemic created significant negative impacts for a number of Canada’s economic sectors, causing...

Friday, February 19, 2021, 02:37:00 PM

Ottawa’s ‘Luxury Tax’ Just Kicked In, But Why Only On Selected ‘Luxuries’?

Canadians faces new and higher dues as Ottawa’s tax plan levied on high-priced possessions took...

Friday, September 2, 2022, 10:20:00 AM

25,000 Canadians Are Demanding Homeowner Relief Amid Rising Interest Rates

Canadians are definitely feeling the pinch of rising interest rates. In a petition on Change.org,...

Monday, October 17, 2022, 05:07:00 PM

Canada’s Economic Output Expands 0.4% in February

Canada’s economy continued its strong recovery in February, expanding by 0.4% and validating forecasts that...

Sunday, May 2, 2021, 02:47:00 PM

Canadian Retail Sales Increased 1.1% in September, But October Momentum Showing Signs of Slowdown

Canadian retail trade showed better than expected results for the month of September, with sales...

Friday, November 20, 2020, 04:01:00 PM