Business Outlook Survey—Autumn 2019

Forward-looking indicators of foreign sales are slightly positive, suggesting modest export sales growth in the next 12 months. Expectations are backed by demand from the United States and the rest of world and by the level of the Canadian dollar. Firms’ expectations of US economic growth have, however, weakened somewhat; several businesses refer to adverse impacts from US–China trade tensions. Some respondents now expect a small US recession over the next 12 months. In this context, a number of firms anticipate their sales will be directly or indirectly negatively affected by slower US economic activity.

The balance of opinion on investment in machinery and equipment has moved up and suggests that capital spending plans remain healthy (Chart 3). Plans to invest more in the next 12 months are widespread outside the Prairies. Firms frequently mentioned strategic investments in technology, automation and software systems as well as capital spending plans to support demand growth. However, several businesses, many of them in the Prairies, reported that regulation, uncertainty and their balance sheet position are holding back their investment plans. Investment intentions are modest among exporters.

News – Bank of Canada

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