The latest quarterly survey from the central bank, released Monday, shows little appetite in executive offices across the country for the kind of investment decisions that would trigger stronger growth in Canada.
The Bank of Canada has called on businesses to invest more in order to be in position to take advantage of the global economic recovery when it comes.
But the survey of 100 representative firms suggested that executives appear to be saying the expansion must come first.
"Expectations regarding the economic outlook remain muted," the bank said of the responses. "Firms continue to express concerns about the prospects for domestic demand."
"While many firms note that gradually improving U.S. demands bodes well for their sales outlook, they generally expect U.S. growth to be slow over the next 12 months and competitive conditions in the U.S. market to remain intense."
On the key question on investment intentions, the balance of opinion — while still positive — declined for the third time in a row. Thirty-five per cent said they expected to increase their spending in the next 12 months, but 26 per cent said the opposite and 39 per cent planned the same level.
The balance of positive investment intentions over negative of nine percentage points was among the weakest since the recovery began in 2009.
"Many firms continued to indicate that economic uncertainty has caused them to delay some current or future projects, or to manage risks by targeting new or different segments of demand or choosing investments with smaller capital outlays," the bank said.
As well, on sales expectations, almost as many firms expect growth over the next year will be weaker than the previous 12 months as those anticipating a pick-up.
CIBC economist Peter Buchanan said analysts had expected that firms would be more optimistic on the future sales question, rather the positive balance of opinion fell from 24 percentage points in the spring to nine points in the summer survey.
"The latest Business Outlook Survey shows companies turning more cautious in the face of recent uneven growth, softer commodity prices and market volatility," he wrote in a note to clients.
The survey did contain some mildly promising news on the jobs front.
Hiring intentions improved slightly over the spring survey, although the bank cautioned the outlook was not strong, noting a "number of firms" said they expected to make only minor changes to their staff in the next year.
Job creation has averaged about 13,600 a month in the first half of the year, about half the pace of the previous six months, Statistics Canada data released Friday indicated.
As well, most companies said they had all the workers they needed to meet current demands, with only 20 per cent saying they faced labour shortages.
The percentage of companies reporting labour shortages has now dropped in four consecutive quarterly surveys.
In a separate survey of loan officers, the bank said credit conditions continued to ease, but noted that the results may be somewhat out of date. The survey was conducted June 10-14. Since then, interest rates have risen in a range of markets, the bank noted.
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