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OTTAWA — Canadian business sentiment remains tepid overall, according to the latest business outlook survey by the Bank of Canada.

The survey suggested that the expectations of companies are diverging as they adjust to weaker commodity prices and a lower Canadian dollar.

The central bank says forward-looking indicators of business activity have improved, supported by a generally positive outlook for the U.S. economy and a weaker loonie.

However, persistent weakness in commodity prices are continuing to work their way through the economy, dampening the outlook for firms tied to the resource sector.

The survey found fewer firms anticipated difficulty meeting an unexpected increase in demand, while indicators of labour shortages remain at low levels, pointing to slack in the job market.

Overall, companies reported credit conditions tightened somewhat over the past three months, in particular for those exposed to the energy sector.

The Bank of Canada has cut its key interest rate twice this year in an effort to boost the economy, which has been hurt by the drop in oil prices.

The central bank’s next rate announcement is set for Oct. 21 when it will also update its economic projections in its latest monetary policy report.

The Canadian Press

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