Canada's economic outlook stabilizing

Economic recovery outlook upTwo surveys conducted early this year confirm that confidence for an economic recovery has increased as borrowing conditions become easier. With spring comes hope on the horizon as credit conditions appear ready to loosen up for borrowers. Two surveys conducted early this year confirm that confidence for an economic recovery has increased as borrowing conditions become easier.

The 2009-10 winter Business Outlook Survey was compiled from interviews conducted by the Bank of Canada's regional offices. The survey puts forth the views of Canadian business executives from 100 firms on issues such as future economic outlook.

Among other things, the survey reveals that:

  • Improvement in opinion was led by businesses in the western provinces in Ontario.
  • These businesses believe that firms will start hiring over the next 12 months.
  • Prices will stabilize or slightly increase after declining the previous year.
  • Inflation is expected to remain within the Bank of Canada's inflation-control range.
  • Of the senior corporate executives surveyed, 26 per cent revealed that credit conditions have eased on businesses over the past three months, and will continue to do so.
  • Improvements have been modest and focussed only on larger firms.
  • Some 14 per cent said that credit conditions were tightening.
  • By the fourth quarter of last year, most executives believed that credit was easier to obtain.

Most firms anticipate there will be few pressures on production capacities. Very few firms report staffing shortages as there has been a wide pool of labour from which to draw.

For the number of executives believing that sales would increase over the following year, there was a split, with 49 per cent expecting decreased sales when compared with last year.

A separate report, the Senior Loan Officer Survey, interviewed senior loan officers during the fourth quarter of 2009. The survey revealed that lending conditions have stabilized for Canadian non-financial firms. Small businesses continue to struggle to obtain credit as lending practices tighten.

Lenders believe that conditions are loosening, after more than two years, albeit very slowly.

Together, both surveys display that since credit conditions are improving, borrowing is becoming easier, hence the business outlook for Canada is also improving.

Written by Melanie Dixon.

 

Published February 11, 2010

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