Business sentiment remains negative according to a survey released Monday by the Bank of Canada.

While some indicators have inched up from historical lows, the results of the spring survey continue to suggest a weak outlook for the Canadian economy, the central bank said.

Canadian firms continue to expect sales growth to slow over the next 12 months, and many anticipate an outright decline in sales volumes. Investment and hiring intentions are weak, and the level of uncertainty remains high.

Reported pressures on production capacity have eased further, particularly among firms in Western Canada, and labour shortages are at a record-low level.

Input and output prices are both expected to grow at a slower pace over the next 12 months, and expectations for inflation over the next two years have declined.

A separate survey on business lending practices in Canada, focused on changes to business-lending practices in the first quarter of 2009.

According to the Bank of Canada, although overall lending conditions continued to tighten, the tightening was somewhat less widespread than in the preceding quarter.

Respondents attributed the ongoing tightening to concerns about the economic outlook and to industry-specific factors.

Both pricing and non-pricing aspects of business-lending conditions continued to tighten.

The balance of opinion on tightening in pricing conditions was the highest recorded since the survey began in 1999, the Bank of Canada said. Responses on pricing conditions indicate an increase in spreads over base rates and fees.

The tightening in non-pricing conditions was less generalized, however, with many respondents indicating that these conditions had remained unchanged since the fourth quarter
of 2008.

IE