The Bank of Canada’s Q2 2018 BOS survey has struck a positive note.
Despite expectations that sales growth would moderate, firms’ sales outlooks remain robust, supported by strong foreign and domestic demand, and improvements in some commodity prices. Investment intentions are slightly weaker, but are still buoyant, driven by sustained demand and intensifying capacity pressures. The employment indicator continues to trend upward, pointing to broad-based hiring plans across the country.
The BOC says reports of pressure on production capacity and labour shortages are increasingly common, mostly outside the energy-producing regions. Businesses across all regions and sectors continue to expect faster input price inflation. With favourable demand conditions in some regions, more firms are in a position to pass cost pressures through to output prices.
Inflation expectations rose again, “but remain concentrated within the Bank’s inflation-control range.”
The BOS indicator moved up to near record levels, in line with widespread business optimism.
The Bank does note that almost all interviews were conducted before the announcement of tariffs on steel and aluminum imports from Canada by the US administration on May 31.