Posted Thursday December 27, 2018

Outlook 2019

Business Outlook Survey—Winter 2018

Results from the winter Business Outlook Survey continue to indicate positive business sentiment and elevated capacity pressures in most regions. For firms in the Prairies, the outlook has weakened.


Although sales prospects generally remain positive, firms expect growth to stabilize. The sales outlook among firms in the Prairies is subdued.

Plans to increase investment and employment, often supported by sales expectations, are widespread, especially in the services sector.

The indicator of capacity pressures is still elevated, despite fewer firms in the Prairies reporting capacity constraints. Views that labour market pressures have intensified over the past year continue to be pervasive, though less so than in the autumn survey.

Firms expect input and output prices to rise at a somewhat greater pace than over the past 12 months. Businesses’ expectations of upward price pressure from tariffs and rising labour costs are partially offset by an anticipated moderation in commodity price growth. Inflation expectations are roughly unchanged and remain concentrated in the top half of the Bank of Canada’s 1 to 3 per cent inflation-control range.

While credit conditions were unchanged for most firms, the indicator points to a slight tightening.

The Business Outlook Survey indicator decreased slightly but is still elevated, signalling that business sentiment overall continues to be positive.

Business activity

The indicator on past sales growth is positive (Chart 1) and higher than in the autumn survey, pointing to the generalized view that firms’ sales grew at a faster pace over the past 12 months. Conversely, over the next 12 months, firms expect sales growth to stabilize, as indicated by the balance of opinion near zero (Chart 2, blue bars). Firms linked to western Canadian oil prices and to housing in some regions expect demand to weaken or remain subdued and sales growth to moderate. Other businesses also anticipate a stabilization or slowdown in the pace of sales growth after a period of robust activity and amid capacity constraints. Indicators of future sales, such as order books and sales inquiries, have improved compared with a year ago (Chart 2, red line); however, this view is less widespread than in recent surveys. Positive sales outlooks are most prevalent among firms tied to information technology or non-residential construction.

Go to Bank of Canada Website and view interactive charts

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ISSN 0824-45
Copyright, 2018

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