BUSINESS

Canadian dollar lower, BoC survey shows business leaders' increasing pessimism

04/08/2013 08:42 EDT | Updated 06/08/2013 05:12 EDT
TORONTO - The Canadian dollar closed lower Monday, losing ground for a second trading day as a glum survey from corporate Canada added to a big disappointment from the latest employment data.

The loonie was down 0.09 of a cent to 98.3 cents US.

The Canadian dollar was down most of the morning but losses picked up after the Bank of Canada’s business outlook survey indicated Canadian firms have become more pessimistic about the economy and plan to ratchet down investment plans while keeping hiring modest.

"Responses of the spring survey indicate that, following a recent slowing in economic activity, firms expect business conditions to remain challenging over the next 12 months," the central bank said Monday in its analysis of the results.

The biggest decline from the previous survey was on the question of sales growth. Almost half the respondents said their sales growth was worse last year than the year before, while only 31 per cent said it was better.

The Bank of Canada says some smaller firms included in the survey reported more difficulty obtaining credit.

But a separate survey of loan officers actually suggested that lending conditions eased slightly in the first quarter of 2013.

The currency's decline came after the dollar lost about four-tenths of a U.S. cent Friday amid data that showed the Canadian economy shed almost 55,000 jobs in March.

The loonie also lost ground as a slew of other weak economic data — including disappointing reads on the American manufacturing and service sectors along with March job creation that was barely half of what was expected — punished commodity prices.

Those prices were mainly positive Monday morning as the June crude contract on the New York Mercantile Exchange edged up 66 cents to US$93.36 a barrel. Prices fell almost five per cent after data late last week showed that crude in storage in the U.S. was at its highest level since 1990 even though refiners had begun to ramp up gasoline production to get ready for the summer driving season.

May copper gained three cents to US$3.37 a pound while June gold bullion in New York declined $3.40 to US$1,572.50 an ounce.