Canadian companies remain cautious on investment, hiring

Companies are pulling back on their investment plans and keeping hiring modest amid growing uncertainty over the economic recovery, a Bank of Canada survey of business intentions suggests. The latest quarterly survey from the central bank, released Monday, shows little appetite in executive offices across the country for the kind of investment decisions that would trigger stronger growth in Canada.

OTTAWA — Companies are pulling back on their investment plans and keeping hiring modest amid growing uncertainty over the economic recovery, a Bank of Canada survey of business intentions suggests.

The latest quarterly survey from the central bank, released Monday, shows little appetite in executive offices across the country for the kind of investment decisions that would trigger stronger growth in Canada.

The Bank of Canada has called on businesses to invest more in order to be in position to take advantage of the global economic recovery when it comes.

But the survey of 100 representative firms suggested that executives appear to be saying the expansion must come first.

“Expectations regarding the economic outlook remain muted,” the bank said of the responses. “Firms continue to express concerns about the prospects for domestic demand.”

“While many firms note that gradually improving U.S. demands bodes well for their sales outlook, they generally expect U.S. growth to be slow over the next 12 months and competitive conditions in the U.S. market to remain intense.”

On the key question on investment intentions, the balance of opinion — while still positive — declined for the third time in a row. Thirty-five per cent said they expected to increase their spending in the next 12 months, but 26 per cent said the opposite and 39 per cent planned the same level.

The balance of positive investment intentions over negative of nine percentage points was among the weakest since the recovery began in 2009.

“Many firms continued to indicate that economic uncertainty has caused them to delay some current or future projects, or to manage risks by targeting new or different segments of demand or choosing investments with smaller capital outlays,” the bank said.

As well, on sales expectations, almost as many firms expect growth over the next year will be weaker than the previous 12 months as those anticipating a pick-up.

CIBC economist Peter Buchanan said analysts had expected that firms would be more optimistic on the future sales question, rather the positive balance of opinion fell from 24 percentage points in the spring to nine points in the summer survey.

“The latest Business Outlook Survey shows companies turning more cautious in the face of recent uneven growth, softer commodity prices and market volatility,” he wrote in a note to clients.

The survey did contain some mildly promising news on the jobs front.

Hiring intentions improved slightly over the spring survey, although the bank cautioned the outlook was not strong, noting a “number of firms” said they expected to make only minor changes to their staff in the next year.

Job creation has averaged about 13,600 a month in the first half of the year, about half the pace of the previous six months, Statistics Canada data released Friday indicated.

As well, most companies said they had all the workers they needed to meet current demands, with only 20 per cent saying they faced labour shortages.

The percentage of companies reporting labour shortages has now dropped in four consecutive quarterly surveys.

In a separate survey of loan officers, the bank said credit conditions continued to ease, but noted that the results may be somewhat out of date. The survey was conducted June 10-14. Since then, interest rates have risen in a range of markets, the bank noted.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta's chief medical officer of health Dr. Deena Hinshaw said province's test positivity rate for COVID-19 is steadily declining. (Photo by Chris Schwarz/Government of Alberta)
One new COVID-19 death in Red Deer, 257 additional cases province-wide

Red Deer sits at 459 active cases of the virus

Eric Rajah and Brian Leavitt were awarded with Meritorious Service Medals by the Governor General for co-founding the Lacombe-based charity A Better World. The agency’s goal is to reduce poverty and boost education in Africa and Afghanistan. (Contributed photo)
Co-founders of Lacombe-based charity receive one of Canada’s highest honours

Eric Rajah, Brian Leavitt of A Better World are honoured by the Governor General

Nice Horse, a band with Central Alberta connections, won three times at the 2021 Alberta Country Music Awards. (contributed photo by Heather Pollock).
Nice Horse wins three times at 2021 Alberta Country Music Awards

Calgary-based band has some central Alberta connections

(BLACK PRESS file image)
AHS warns parents to keep button batteries away from small children

Some kids swallowed the small cells and were hospitalized

Many rural seniors are having to travel a long way to get vaccinated against COVID-19. Stettler residents are being told to go to Red Deer, Drumheller or Camrose. (Black Press file photo).
Rural central Alberta seniors have to travel far to get vaccines

Stettler residents are being directed to Red Deer, Drumheller or Camrose clinics

Red Deer dogs Bunsen and Beaker helped save a missing pet recently. The two dogs have more than 80,000 followers on Twitter. (Contributed photo)
WATCH: Red Deer science dogs help save lost pet

Red Deer science-communicating dogs Bunsen and Beaker helped rescue a missing pet… Continue reading

‘Door is open:’ Ottawa ready to help pork producers affected by Olymel shutdown

‘Door is open:’ Ottawa ready to help pork producers affected by Olymel shutdown

Environment and Climate Change Minister Jonathan Wilkinson responds to a question in the House of Commons on Nov. 19, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Canada can’t ‘power past coal’ and keep exporting it, environment group says

Canada can’t ‘power past coal’ and keep exporting it, environment group says

A nurse assistant prepares a dose of the Oxford-AstraZeneca vaccine for COVID-19 during a priority vaccination program for health workers at a community medical center in Sao Paulo, Brazil, Wednesday, Feb. 3, 2021. THE CANADIAN PRESS/AP-Andre Penner
Split over AstraZeneca vaccine sparks questions on who will get it as variants spread

OTTAWA — Canada’s chief public health officer says new COVID-19 cases are… Continue reading

Banana bread (file photo)
Calgary not-for-profit going bananas trying to off-load pallets of fruit

CALGARY — It’s been bananas at a Calgary not-for-profit as it tries… Continue reading

Image courtesy Creative Outlet
Edmonton chiropractor admits to sexually assaulting six female patients in 1980s

EDMONTON — A chiropractor has admitted to sexually touching six of his… Continue reading

Alberta Minister of Health Tyler Shandro addresses a news conference in Calgary on May 29, 2020. THE CANADIAN PRESS/Jeff McIntosh
Alberta may follow B.C.’s lead on faster rollout of first COVID-19 dose

EDMONTON — Alberta’s health minister says the province is considering whether to… Continue reading

A locally-produced video project aims to preserve Canada’s railway history

‘Railways have been an integral part of Canadian history since 1836’

Ryan Jake Applegarth of Ponoka, 28, is scheduled to appear at Ponoka Provincial Court on March 12, 2021. (File photo)
Discussions about justice continue as Ponoka murder victim’s case proceeds

Reaction to comments Ponoka Staff Sgt. Chris Smiley made to town council last month

Most Read