A couple of sources of strength stood out in a "generally solid" Bank of Canada Q1 Business Outlook Survey (BOS) released on Monday, said Bank of Montreal (BMO).
Firstly, investment intentions surged to their strongest in over a year in Q1. They were entirely driven by firms that weren't impacted by trade tensions with the United States, noted the bank.
However, BMO also noted, the key message is that the broad improvement of investment intentions came as more businesses plan to increase capacity and productivity rather than routine maintenance.
The BoC has long been pointing to Canada's lagging productivity growth as an area of improvement. This issue came under renewed scrutiny amid the U.S. trade war, and it appears the message is being heard, according to BMO.
Secondly, hiring intentions stepped up to their highest in three years, noted BMO. "Hiring plans are expected to be modest, which isn't surprising in this environment of sharply slower population growth. Still, the survey points to a positive, or at least stabilizing, direction for a labor market that has been softening in recent years," it said.