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Businesses plan to invest despite global uncertainty: BDC

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Canadian business owners in parts of the country plan to keep spending, despite a murky outlook for the global economy.

In a new report, Business Development Bank of Canada (BDC) surveyed 1,000 small and medium-sized enterprises (SMEs) and found that most of them plan to invest more in their businesses.

“Despite low confidence in the economy, Canadian entrepreneurs remain relatively upbeat about their own company’s prospects,” read the report.

“They expect to see sales grow over the next 12 months and to hire workers to meet sustained demand for their products and services.”

Factors boosting investment spending include strong demand for their products and services, a need to upgrade technology, and momentum from investments made last year.

As the economy shifts toward services and digitization, businesses say they’ll invest in technology, marketing, intellectual property, and training. They’ll spend less on tangible assets like real estate as well as machinery and equipment.

Not everyone

But not all types of businesses plan to open up their wallets. BDC said the expected rise in investment spending will come almost entirely from exporters.

“On one hand, they’re much more optimistic about the outlook for the U.S. and global economies.”

“On the other hand, exporters face higher capacity constraints than domestic businesses. In fact, 56% of exporters are reporting some difficulties meeting an unexpected increase in demand, compared to 46% for domestic businesses.”

Businesses focused on the domestic market aren’t as upbeat and are less likely to deploy cash.

Not everywhere

Ontario and Quebec have been leading job growth, and businesses in the two provinces intend to increase spending the most. Manufacturing, technology, and services are the strongest sectors. However, Quebec businesses worry about labour shortages.

Business owners are the most pessimistic in the Prairies, where low commodity prices have cut into cash flow.

Businesses in British Columbia plan to spend less on machinery and equipment.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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