The outlook for exports is providing steady support for firms’ sales expectations, with businesses again citing the favourable exchange rate and US demand as the most important supporting factors. Expectations for US economic growth over the next year are generally positive, although considerable uncertainty surrounds the implications of the US election outcome for firms’ outlook (Box 1). While several exporters saw a positive effect from the weaker dollar on their past and future sales volumes, the majority did not lower their foreign prices and benefited mainly from higher margins. Meanwhile, several firms noted that various regulatory hurdles or trade barriers are limiting export growth, and many expressed concern about the risk of rising protectionism.

The balance of opinion on investment intentions continued to recover (Chart 3), mainly because fewer firms pointed to a drop in investment spending. While plans to invest over the next 12 months remain more pronounced in Central and Eastern Canada, positive investment intentions are now evident in all regions and sectors, particularly among exporters. Commodity-linked businesses reported the need to invest following often significant cuts over the past two years.

Firms experiencing robust demand reported expanding their operations, for example, by opening new establishments. Others referred to smaller-scale expenditures, such as investments in information technology or office equipment in the case of many service firms. Many businesses reported directing investment efforts toward cost reduction or merely replacing existing physical capital.