4 takeaways from the Bank of Canada Business Outlook Survey

Bank of Canada's Business Outlook Survey was released yesterday. It shows improving indicators of future sales at most businesses and intensifying labor shortages. 

One of the most important reports about the Canadian economy is the Bank of Canada Business Outlook Survey. This is a quarterly report compiled from the answers gathered from 100 firms on a broad range of economic perspectives.

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The report offers a clue about the state of the Canadian economy, and yesterday's release provides a broad perspective of the economic challenges in the fourth quarter of last year.

Four main takeaways are worth mentioning. On the positive side, firms' plans to invest are widespread, and indicators of future sales are improving. On the flip side, labor shortages are intensifying, and supply chain bottlenecks continue to increase.

Supply chain bottlenecks continue to increase

Another negative highlighted by the report is that supply chain bottlenecks continue to increase. Firms cited the lack of access to markets for some exporting firms as one of the reasons.

As a result, firms hold more inventory if possible, and labor bottlenecks increased.

Improving indicators of future sales

On a positive note, most firms see improving indicators of future sales. More precisely, strength in demand led to increased expectations of solid sales.

Furthermore, the number of firms expecting faster growth exceeded the number of those expecting slower growth. Effectively, demand rises in most regions and sectors, such as housing, retail, and manufacturing.

Plans to invest are widespread

Still on the bright side, firms reported solid investment intentions. Investment in machinery and equipment is expected to be higher across sectors and regions. Moving forward, it would be interesting to see how the firms' investment plans work out in the face of the ongoing supply chain disruptions.

All in all, the Bank of Canada's Business Outlook Survey for Q4 2021 reveals a healing economy as the ongoing recovery from the COVID-19 pandemic continues.