Canadian economy looking stronger than the U.S.
July 15, 2011
As the U.S. struggles with a faulty economy - rife with high unemployment, low growth prospects and a seemingly insurmountable debt crisis to boot - the country's neighbors to the north may be faring better than many had assumed.
The Bank of Canada released the results of its quarterly survey this week, finding the nation's corporate leaders are now more confident in the state of their country's economy. Although the figure has declined somewhat in recent months, the index indicating firms' sales projections remained in positive territory during the second quarter.
"The balance of opinion on employment has risen to a record high level," the bank reported in the summer business outlook survey released Monday, according to the Chronicle Herald. "Intentions to increase employment over the next 12 months were widespread across all regions and sectors, particularly in the services sector."
The report found 57 percent of surveyed firms expect to hire new workers over the next year. Meanwhile, in the U.S, an astounding two-thirds of small business owners - 64 percent - report they do not plan to hire over the same period, according to the U.S. Chamber of Commerce.
Still, a number of challenges remain on the minds of Canada's business and policy leaders. The survey also found more than half of companies expect to face trouble meeting an unexpected rise in demand for products and services, according to CBC News.
"But even if business expectations have become moodier, they still started from a position of relative, absolute and surprising strength," BMO Capital Markets senior economist Michael Gregory told the Chronicle. "The survey is telling the Bank of Canada that its very accommodative monetary policy is doing a good job in stimulating the economy, closing the output gap and pushing underlying inflation back up to target."
Access to credit may be considerably stronger as well, as respondents expressed higher optimism in loan conditions. However, the labor market remains in pre-recession territory, with 25 percent of firms reporting they are facing difficulties finding qualified workers, even as the BOC reported this figure was well below the survey's average.