Canadian firms see inflation staying high amid record confidence
BNN Bloomberg
Canadian business sentiment rose to record levels in the third quarter, though inflation expectations are elevated and labor shortages are getting worse, according to a Bank of Canada survey.
Canadian business sentiment rose to record levels in the third quarter, though inflation expectations are elevated and labor shortages are getting worse, according to a Bank of Canada survey.
An easing of COVID-19 restrictions has driven a sharp improvement in business confidence, with executives in the quarterly survey citing a strong outlook for domestic and foreign sales. A broad gauge of business sentiment reached its highest level in records going back to 2003.
Still, businesses say a lack of available workers and supply-chain bottlenecks are hurting their ability to meet demand. That’s driving inflation expectations higher: 45 per cent of firms anticipate inflation will be above 3 per cent over the next two years.
“Most firms continue to anticipate healthy growth in both domestic and foreign demand, although for those offering hard-to-distance services this means recovering from low levels,” the bank said in the summary of its findings.
The report adds to evidence that firms are facing challenges meeting robust demand in the aftermath of pandemic lockdowns. More than half of firms said capital expenditures over the next two to three years will be higher than before COVID-19 hit.
