By Julie Gordon

OTTAWA (Reuters) – A file variety of Canadian companies are going through capability pressures amid intense labor shortages and ongoing provide chain difficulties, with many anticipating vital wage and enter value progress, a daily Financial institution of Canada survey stated on Monday.

The central financial institution’s Enterprise Outlook Survey Indicator dipped within the first quarter from a file excessive the earlier quarter, however remained far above pre-pandemic ranges. The survey was performed earlier than Russia’s invasion of Ukraine.

“The variety of corporations reporting capability pressures associated to labor or provide chain challenges is at a file excessive,” the survey stated.

“Due to persistent capability pressures and robust demand, corporations count on vital progress in wages, enter costs and output costs. Plans to extend funding spending and add workers proceed to be widespread.”

Inflation expectations for the following two years continued to extend, with 70% of corporations now anticipating inflation to be above the Financial institution of Canada’s 1-3% management vary over the following two years.

Canada’s inflation hit 5.7% in February, a 30-year excessive and the eleventh straight month above 3%.

Economists stated greater inflation expectations bolster the case for the Financial institution of Canada to hike rates of interest by 50 foundation factors at its choice subsequent week.

“If we nonetheless wanted to cement the case for a half level fee hike in April, the Financial institution of Canada’s Enterprise Outlook survey supplied it, no less than when it comes to inflation expectations,” stated Avery Shenfeld, chief economist at CIBC Capital Markets, in a notice.

A separate survey of client expectations discovered most of the people additionally anticipates inflation above goal for the following two years, earlier than easing. It famous long-term inflation expectations stay properly anchored.

Cash markets estimate a 70% probability the Financial institution of Canada will go forward with the bigger enhance on April 13. A deputy stated final month the central financial institution was able to act “forcefully” to rein in inflation.

The Financial institution of Canada additionally did a separate on-line survey on the impression of Russia’s invasion of Ukraine, which Moscow calls a “particular operation,” on Canadian corporations. About half stated they count on to be affected, largely as a consequence of greater commodity costs and elevated provide chain woes.

A number of corporations, notably these tied to power and different commodities, count on greater gross sales.

The Canadian greenback rose 0.3% to 1.2480 to the buck, or 80.13 U.S. cents.