By Promit Mukherjee and David Ljunggren
OTTAWA, Jan 20 (Reuters) – Canadian firms see improved demand and sales in the coming year, largely fueled by rate cuts, but are concerned about the potential damage from promised U.S. policies, the Bank of Canada said on Monday.
The Bank’s fourth quarter business outlook survey said overall business sentiment remained subdued. The survey is closely watched by the BoC as it gives a perspective on investment and hiring intentions of companies.
The business outlook indicator – a metric of prospects under current economic conditions – improved to -1.18, its best standing in the last five quarters but continued to be below average.
Only 15% of firms are now planning for a recession in Canada over the coming year, down from 16% in the third quarter, it said.
“After a period of weak demand, firms expect their sales growth to improve over the coming year. This expectation is largely driven by recent interest rate reductions and the anticipation of further cuts ahead,” it said.
The outlook was carried out from Nov 7-27, before the bank’s most recent 50 basis point cut on