BoC: Many firms consider impacts of pandemic on activity to be behind them

"Many firms consider the impacts of the pandemic on their activities to be behind them," the Bank of Canada (BoC) noted in its Business Outlook Survey for the first quarter on Monday.

Key takeaways as summarized by Reuters

"Survey shows continued improvement in business sentiment; outlook indicator hits highest since level since mid-2018."

"64% of firms indicated sales have reached or exceeded pre-pandemic levels; this is higher than the 52% recorded in Q4 and a sign recovery is broadening further."

"Domestic and foreign sales prospects have picked up from weak levels a year ago, but outlook remains challenging for firms tied to high-contact services."

"19% of firms do not expect their sales to return to pre‑pandemic levels in the next 12 months."

"Sales outlooks supported by low interest rates and shift in consumer preferences to products and services that make it easier for people to stay at home."

"Businesses intend to increase investment spending to meet growing demand and add needed capacity; plans to hire are common for firms with healthy sales outlooks."

"Reports of capacity pressures are frequent among businesses facing strong demand; most common bottlenecks are related to labor."

"Firms expect positive pressures on the growth of their input prices, wages and output prices."

"Firms' inflation expectations increased but most remain in the Bank of Canada’s 1 to 3 target range."

"Inflation expectations decreased over a one-year horizon, more than reversing increase seen in Q4 2020 survey."

"Consumers’ expectations for house price growth rose again, with Canada average expected year-on-year gain now at 5.32%, the highest since Q2 2016."

Market reaction

The USD/CAD pair showed no immediate reaction to this report and was last seen gaining 0.27% on the day at 1.2561.