Ian McLean
President + CEO
Greater Kitchener Waterloo Chamber of Commerce
The Bank of Canada released its latest Business Outlook Survey results for the Summer 2014 and they hold encouraging signals for business in Canada, while maintaining caution. There were a number of indicators in the survey results that point to firms in Canada are preserving a positive economic outlook as we move into the latter half of 2014.
Business Activity
Business activity for firms showed that “fewer firms cited outright declines in sales volumes relative to recent surveys” and that for international sales there are indicators showing momentum for future sales continue to improve compared to 2013. This type of international sales momentum has been spurred on by the strengthening U.S. economy and the recent depreciation of the Canadian dollar. Domestic facing firms, however, are facing increased competitive conditions that remain challenging.
According to the Outlook Survey 69% of firms had either the same or greater sales volume in the past 12 months and 74% of firms expect continued improvement in sales in the 12 months to come. This is a sizable increase the survey results in 2013.
New increases to employment at surveyed firms are expected to increase with SME’s most likely to be planning additions to their workforce.
Pressures on production Capacity
There are fewer businesses expecting to face difficulty in meeting an unexpected increase in demand while firms facing labour shortages remain virtually unchanged at 22% of those surveyed. The reported labour shortages are noted as to be made up mainly in Western Canada, but there are skilled labour shortages in certain sectors in Ontario as well.
Prices and Inflation and Credit Conditions
Prices on products from Canadian firms are generally expected to be restrained due to continued domestic and international competition. The Bank of Canada is expecting inflation to stay within 1-3 per cent and the majority of firms surveyed expect inflation to actually stay at the lower end of the Bank’s projections to between 1 and 2 per cent.
Credit conditions have also moved towards more favourable borrowing rates, terms, and conditions over the past three months for those businesses with solid financial positions. This news is very positive for manufacturers looking to invest in training and equipment in order to make the needed transition into areas like advanced manufacturing in order to stay competitive against international competition.
I encourage you to take a look at the full 6-page Summer 2014 Business Outlook Survey.
