Bank of Canada Q3 survey has showed a drop in the percentage of companies facing shortages of labor, therefore strengthening the fact that tightness of labor market seen in early 2006 is gradually easing off.
In general, businesses seem to have an optimistic economic viewpoint, but shifts in the expectations, compared with Q2 poll results, seemed to reflect this perception that Canada's economic growth is indeed softening.
Major changes reflected in the poll were regarding sales outlook. Over the coming twelve months, 34% of companies expect an increase in sales volume, a decline from 42% in last survey.
A major factor in deciding central bank's monetary policy, the survey, found that firms based in Atlantic & Central Canada have made huge investments in past 12 months. The balance in opinion among Western Canadian firms is quite fair regarding their plans for investing in equipment & machinery.
However the key observation, as far as economists are concerned, is inflation that is not much of a worry as Canada's economic growth softens further. Firms expecting inflation to go beyond 3% went down to 20% in 2006 from 27% in the last year.
"The survey shows that Canada's economy is rising continuously but slowly as compared to past performances, thus strengthening economists' predictions that policy rates may remain steady", said an analyst at RNCOS.
Bank of Canada's Key-lending rate remained unaltered at 4.25% in September 2006, though it has warned of fallout resulting from economic slowdown in US.
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