Pessimism waning, business sentiment not as bleak as three months ago

OTTAWA — Canadian businesses remain gloomy about their prospects over the next year in the face of the global recession, although they’re not quite as negative as they were three months ago, the Bank of Canada said Monday.

OTTAWA — Canadian businesses remain gloomy about their prospects over the next year in the face of the global recession, although they’re not quite as negative as they were three months ago, the Bank of Canada said Monday.

The central bank’s quarterly survey of 100 selected companies found business sentiment “negative” across a wide range of issues, such as sales volumes, product pricing, investment intentions and credit conditions.

And a separate survey of lenders by the Bank of Canada found the cost of obtaining credit and conditions remained a problem.

The only good news Monday was that business sentiment wasn’t as bleak as three months ago, when the winter survey recorded the lowest level since the survey began in 1997.

“The balance of opinion for both past and future sales remain markedly negative, although no longer at record levels,” the bank said in its report Monday.

“As in the winter survey, many companies expect a decline in their sales volumes over the next 12 months. The weak outlook is widespread, since the global recession is expected to continue to affect foreign and domestic demand across the country.”

In the survey of senior loan officers, the Bank of Canada said lending conditions continued to tighten for firms in Canada, with pricing being a key impediment.

While non-price factors such as availability were less generalized than three months ago, a record 82 per cent of loan officers said tightening was being done through higher prices relative to base rates.

“The balance of opinion on tightening in pricing conditions was the highest recorded since the survey began in 1999,” the bank said.

Economist Douglas Porter of BMO Capital Markets said the results aren’t a surprise given that the world is in recession and Canada likely experienced the worst economic contraction in more than 50 years during the first quarter of 2009.

The surveys were conducted in February and March.

Porter noted that although the results were better than the previous reports, the Bank of Canada appeared in its commentary to view the glass as half-empty.