Businesses’ sales outlooks, investment and hiring
Businesses have revised down their sales outlooks. Indicators of future sales—such as order books and sales enquiries—have declined. This decline is particularly prominent in manufacturing. In addition, sectors that depend on households’ discretionary spending continue to report weak demand. However, some businesses note a strong “Buy Canadian” sentiment, which is likely mitigating some of the negative impact of trade tensions.
Heightened trade uncertainty has also led many businesses to scale back their hiring and investment plans (Chart 3). New investment is being further restrained because:
- Credit has become more difficult for some businesses to access.
- The cost of imported capital goods, such as equipment and machinery, has risen.
However, most businesses say they are continuing with existing investment projects, particularly projects aimed at maintaining capacity and improving productivity. In the oil and gas sector, many businesses expect only a modest impact on their near-term investment and production decisions. But a tariff would make projects less attractive to investors over the medium term.
