BoC Survey Signals Shift Toward Productivity-Boosting Investment as Hiring Intentions Fall, BMO Says
Monday's quarterly Bank of Canada Business Outlook Survey (BOS) revealed a notable bright spot as the share of firms planning to increase spending on machinery and equipment rose slightly to 30% from 29%, remaining well above the long-run average of about 18%, according to Bank of Montreal (BMO). While part of this increase likely reflects stronger investment in the energy sector -- which could receive a further boost from recent pipeline announcements -- it nevertheless represents an encouraging development, wrote BMO in a Monday note. At the same time, hiring intentions declined to 27%, below the historical average of 34%. This is only the third instance in the 112 BOS readings in which net investment intentions have exceeded net hiring intentions, suggesting a potential shift toward stronger productivity growth, wrote Chief Economist Douglas Porter in the note. That said, the survey should be interpreted with some caution, added BMO. Conducted in mid-May, when oil prices were near US$100 per barrel, it likely captured a period of heightened pessimism, potentially overstating the weaker growth outlook and elevated inflation expectations. "It is a bit concerning that input.
Monday's quarterly Bank of Canada Business Outlook Survey (BOS) revealed a notable bright spot as the share of firms planning to increase spending on machinery and equipment rose slightly to 30% from 29%, remaining well above the long-run average of about 18%, according to Bank of Montreal (BMO).
While part of this increase likely reflects stronger investment in the energy sector -- which could receive a further boost from recent pipeline announcements -- it nevertheless represents an encouraging development, wrote BMO in a Monday note.
At the same time, hiring intentions declined to 27%, below the historical average of 34%.
This is only the third instance in the 112 BOS readings in which net investment intentions have exceeded net hiring intentions, suggesting a potential shift toward stronger productivity growth, wrote Chief Economist Douglas Porter in the note.
That said, the survey should be interpreted with some caution, added BMO.
Conducted in mid-May, when oil prices were near US$100 per barrel, it likely captured a period of heightened pessimism, potentially overstating the weaker growth outlook and elevated inflation expectations. "It is a bit concerning that input.