The Globe and Mail reports in its Saturday edition that the Bank of Canada's final quarterly business outlook survey of 2018 finds fortunes are declining in the West while optimism is rising every else. The Globe's Barrie McKenna writes that the BOC survey found "positive business sentiment and elevated capacity pressures in most regions." The mood, however, is different on the Prairies where the BOC reported a "subdued" outlook for sales and weaker capacity pressures.
The survey found, "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." The BOC's composite indicator of sentiment dropped to 2.19 in the latest survey, down from 2.83 in the fall and 3.07 in the summer.
Unfortunately, the positive mood evident in previous surveys is not translating into higher business investment, TD economists Brian DePratto and Ksenia Bushmeneva said in a research note.
The survey suggests Canada's economy is "hanging in there" in spite of the problems in the oil patch, Bank of Montreal economist Benjamin Reitzes said. That should allow Bank of Canada Governor Stephen Poloz to continue hiking its key interest rate in 2019.
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