We're not out of the woods yet. The energy shock dented Canada over the past 12 months, but the Bank of Canada's latest survey suggests that the tide isn't yet turning back in our favour.
Expectations for sales in the next 12 months showed only a slight edge in the number of firms expecting an acceleration vs. a deceleration (43% vs 38%),
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and a fairly tame reading on machinery and equipment spending plans as well, with an unimpressive 38% seeing them higher after the past year's softness. Employment readings are middling, and still below the normal run rate that we saw in 2011-2013. On the inflation front, the readings are similarly tame, with no signs of issues with capacity pressures, lots of labour market slack, and firms seeing no pick up in their output price inflation. Surprisingly, there's a view that overall CPI inflation will be stuck in the 1-2% range rather than higher, little changed despite the partial recovery in oil prices.
Overall, the Bank of Canada's wait and see stance is well justified by these results, but they aren't yet worrisome enough to give thoughts to another rate cut.