Business sentiment improves as companies move out of the pandemic, says the Bank of Canada
© Reuters. FILE PHOTO: A sign is pictured outside the Bank of Canada building in Ottawa
By Julie Gordon
OTTAWA (Reuters) – Business sentiment in Canada continues to improve and many companies are viewing the impact of the COVID-19 pandemic as being behind, although the outlook for high-contact services remains challenging, a Bank of Canada survey found on Monday.
The survey, which was conducted before new restrictions came into effect earlier this month to combat a third wave of coronavirus, found that 64% of companies had sales at or above pre-pandemic levels.
“Given the decreased uncertainty and the continued introduction of vaccinations, the indicators of companies for future sales have strengthened again,” said the central bank in its spring business outlook survey. The BOS indicator reached its highest level since mid-2018.
“For many companies, demand from domestic and overseas customers – particularly from the US – has improved year over year,” he added. The United States is Canada’s largest trading partner.
Due to booming demand, companies are planning to increase capital spending to expand capacity, often through digitization and automation, according to the Bank of Canada.
Most companies have recruitment plans and many struggle to find new workers. The personnel challenges are greatest in craft and information technology as well as in rural areas.
Still, nearly 20% of businesses – many of high-exposure businesses like tourism and non-retail retail – are struggling and don’t expect their sales to return to pre-pandemic levels over the next year.
The survey of 100 companies took place between February 16 and March 8, when COVID-19 cases declined and restrictions were eased due to the second wave.
In a separate study, the Bank of Canada found that consumer expectations for house price growth rose again in the first quarter of 2021, hitting the highest point since 2016.
Canada’s ardent real estate market has supported the country’s economic recovery from the COVID-19 pandemic, but market imbalances are escalating and leading to already high household debt, the Bank of Canada said on Friday.
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