Business outlook surprisingly rosy

Despite the uncertainty taking hold in the global economy, Canadian businesses are feeling surprisingly upbeat about the coming year, a new Bank of Canada survey shows.

The majority of senior managers are expecting unchanged or higher sales, investment, and even hiring, over the then and there 12 months, according to the central bank's latest business outlook survey, released Monday.

The same period

Forty-seven per cent of those surveyed expected sales growth to increase over the same period, and 43 per cent plan to increase investment.

"It is encouraging to see that international events have had minimal impact on businesses' intentions to invest and hire," said Diana Petramala, economist at TD Economics.

But the accompanying survey of senior loan officers showed that business-lending conditions eased somewhat in the second quarter.

Brave face on the outlook

"Canadian business continues to put a brave face on the outlook," Doug Porter, deputy chief economist at BMO capital Markets noted in a innovation report, adding that "this may not translate into action."

"Although growth and global economic demand may be slowing, businesses are stepping up their efforts to increase their share of global markets by increasing productivity, introducing new products or entering new markets," she said. "During the pie may not be growing, Canada may be trying to take a bigger share."

The optimistic view goes against the grain of most business and consumer confidence samplings in the past two months. The Canadian Federation of Independent Business small business barometer, to illustrate, has revealed declining confidence.

Lot to be worried about

"Businesses have a lot to be worried about. U.S. economic data keeps on disappointing, the European financial crisis endures and emerging markets are slowing more than was expected. We believe that businesses are likely to remain cautious about spending in a risk-filled environment, now conditions are conducive to modest economic growth."

As so then, small businesses as a rule have a more difficult time expanding into new markets and improving productivity when compared to larger companies.

The euro zone crisis continues

The euro zone crisis continues, with its focus shifted to rising bond yields in Spain, where the country's entire banking sector is awaiting an international bailout.

The U.S. recovery has suffered its own setback with a stalled labour market and ongoing worries about the so-called fiscal cliff, as lawmakers tussle over a year-end deadline for a basket of tax cuts and jobless benefits.

View that once you got past the Greek elections

"There might have been a view that once you got past the Greek elections, things would improve. Now that hasn't happened. We're not less concerned about Greece leaving the euro. We're nevertheless more concerned about bigger economies like Spain and Italy," she said. "Should it become more sustained and deepen, it would feed into business sentiment."