The Bank of Canada says it's detecting early signs of a "modest" pickup in corporate investment over the near term, even amid considerable uncertainty surrounding the U.S. economic agenda.
In its first business outlook survey since President Donald Trump was inaugurated, the central bank said signals of a recovery in business investment are starting to emerge after a two-year period of weakness triggered by the oil-price shock.
"The swing in the indicator into positive territory is associated with improving business sentiment from a weak level," the bank said in its report on Monday.
"The results suggest a modest recovery in business sentiment."
The poll results follow an encouraging data run in recent months for growth, trade and the job market.
The findings suggest a greater percentage of Canadian firms surveyed are more optimistic about the future than they were in January for areas such as sales growth.
The survey did find that when it comes to exports, many companies have concerns about the impacts of potential Trump policy changes, including increased protectionism and plans to slash U.S. corporate taxes.
But it also found that some of the firms surveyed between mid-February and early March saw benefits from the U.S. — with the approval of the Keystone XL pipeline and the overall strengthening of the American economy.
The survey "again carried a more upbeat tone, flashing plenty of signs that the worst of the oil price shock is behind the Canadian economy," Robert Kavcic, senior economist with BMO Capital Markets, said in a research note.
The survey suggested that companies expect their costs to rise over the next year due to higher anticipated commodity prices, new carbon-pricing regimes in Ontario and Alberta, and the fact past exchange-rate depreciation has been largely built into prices.
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