Bank of Canada notes divide in business confidence

Low oil prices continue to weigh on some regions more than others, bank reports

BoC Policy Report 20150121

The Bank of Canada says there is a divide in business confidence as low oil prices continue to weigh on some regions more than others.

The central bank’s summer Business Outlook Survey suggests businesses on the Prairies expect sales to slow during the next 12 months as the oil price shock spreads across sectors.

However, the Bank of Canada says demand is strengthening in regions that are less exposed to the energy sector.

Overall, the survey said more firms reported sales growth during the past 12 months than those that saw sales drop, but the margin shrank compared with earlier surveys. As well, the balance of opinion of firms who expect sales to grow over the next 12 months improved modestly.

In terms of spending on machinery and equipment, the survey points to a moderate increase in investment spending over the next year.

However, there are distinct regional differences with plans to increase spending more prevalent in Central Canada and the manufacturing sector. Meanwhile, energy-related regions and sectors expect to continue to see a decrease in spending.


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