Canadian economic recovery improves business confidence

In a recent speech, Bank of Canada Governor Stephen Poloz noted that in the wake of low oil prices, the Canadian economy would have to look for other industries to drive economic growth. The Bank of Canada's role is to help facilitate that adjustment.  

Indeed, today's report underscores the view that other sectors of the economy would pick-up some of the economic slack caused by the collapse in oil prices. In particular, the survey shows nascent signs of an improvement in the willingness of businesses  in non-energy related sectors to invest in machinery and equipment. 

"The trade-based sectors are expected to step out of the resource sector's shadow and see a pickup in investment spending over the next couple of years. Overall, the worst of the economic soft patch is now behind us, and the economy is recovering, albeit modestly", says TD Economics. 

Moreover, the challenges which will remain are recognised.  For one, a modest pace of hiring is expected due to a lagged impact of past weakness in real GDP growth, with the unemployment rate holding steady relatively lofty at around 7.0% through the next year. Second, the oil sector will continue to be a sore spot for the economy with oil prices remaining low.
  "The Bank of Canada is likely to keep monetary policy accommodative over the next year, helping the economy transition to one more dependent on business investment and non-energy exports. Low and stable inflation will allow the Bank to do so", added TD Economics.