Business sentiment in Canada "improved slightly" in the third quarter, although differences between regions were more pronounced, latest results from the Bank of Canada's Business Outlook Survey showed.
The Business Outlook Survey indicator rose to 0.43, up from a revised reading of negative 0.07 in the second quarter, with businesses in the provinces of Ontario and Quebec leading in business sentiment.
Future sales indicators suggest moderate growth ahead, the Bank of Canada said, as sales expectations were positive in most areas of the country, though the provinces of Alberta, Saskatchewan and Manitoba reported weaker numbers.
Export sales continue to be supported by foreign demand, although trade tensions and concerns of slowing U.S. economic growth weighed down expectations.
Canadian companies were upbeat about investment and hiring, particularly in Quebec, Ontario and British Columbia. Businesses in these provinces also reported "somewhat elevated levels" of production capacity pressures and labor shortages.
Most respondents saw growth in input costs slowing down, with less pressure coming from commodity-related inputs compared to non-commodity costs like service prices. Slightly more businesses intended to raise their selling prices in the third quarter.
"The majority of businesses still anticipate inflation will be in the lower half of the bank's 1% to 3% inflation-control range over the next two years," the Bank of Canada said, while businesses in Quebec expected inflation to be at 2% to 3% on the back of rising labor costs and a relatively strong regional economic activity.
The survey results suggested that terms and conditions for obtaining financing may have eased slightly in the third quarter, although businesses in the Prairie provinces reported tighter credit conditions, the bank said.