Results of the Summer 2014 Survey

The summer Business Outlook Survey continues to offer some encouraging signs for the economic outlook, although lingering uncertainty amid intense competition still hinders the pace of growth.

Overall, the outlook of businesses has not changed materially from the spring survey. While responses suggest a more modest improvement in past sales activity, expectations for future sales growth remain positive, and there are indications that business sentiment regarding exports is gradually firming.

Expectations for U.S. economic growth continue to strengthen, and orders from domestic and international customers show improvement from a year ago. The balance of opinion on investment in machinery and equipment remains firmly positive, although investment plans are tied primarily to upgrading or replacing existing equipment over the next 12 months. Signs of more robust growth in foreign demand over the near to medium term are leading some exporters to favour investments with a longer-term strategic focus.

Fewer firms anticipate difficulty meeting an unexpected increase in demand, and reports of labour shortages are little changed. On balance, firms expect input prices to rise at a somewhat slower pace than over the past 12 months as upward pressure from the recent depreciation of the Canadian dollar gradually dissipates. Strong competition continues to restrain expectations for output prices. Inflation expectations are unchanged and remain concentrated in the bottom half of the Bank’s inflation-control range.

The balance of opinion on credit conditions moved more strongly into easing territory.

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