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Corporate Canada turns sour as hiring intentions, investment drop to lowest levels since 2009 on oil shock

Toronto's financial district. The Bank of Canada said plans to cut staff were more widespread and not confined to commodity-producing sectors and regions.

OTTAWA — The hiring and investment intentions of Canadian companies have dropped to their lowest levels since 2009 as the fallout from sliding commodity prices seeps beyond resource-rich regions, a new survey has found.

Companies are anticipating a darker road in 2016 with many facing “significant challenges” tied to the commodity- and energy-price plunges, according to the Bank of Canada’s latest business outlook survey.

“The negative effects of the oil-price shock are also increasingly spreading beyond the energy-producing regions and sectors,” the central bank said in the quarterly report released Monday.

“For example, many businesses across the energy supply chain continue to struggle as they adjust to an environment of weak demand.”

As a result, the poll found fewer firms expected to boost their staff levels over the next 12 months, while plans to cut employees were more “widespread.” Many of the companies anticipating employment declines this year mentioned the need to cut costs, the survey said.

These hiring intentions dropped to their lowest level since the 2009 recession, the Bank of Canada said.

Companies also predicted the weaker 2016 outlook to affect their investments in equipment and machinery. Many planned to curb spending to repair and replace existing equipment and, compared to recent surveys, the bank said there were fewer projects expected to expand production.

The survey’s interviews were conducted between mid-November and early December, before oil prices and the dollar slid even further.

The resource-dependent economy hobbled through 2015, a year that saw economic growth go in reverse over the first two quarters.

The public purse has also taken a major hit from the price slide. The federal government has downgraded the country’s fiscal outlook for the coming years, removing billions from the bottom line.

The business survey, however, said exporters remained optimistic their sales will benefit from strengthening foreign demand over the coming year, particularly amid widespread expectations of growth in the U.S. economy.

The questionnaire also found that some firms believe the lower dollar will boost foreign sales and tourism-related business. But at the same time, the cheaper loonie hikes up the costs of products and services that companies need to import from outside Canada.

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