skill level of the canadian workforce. business and governments need to continue to focus on workplace training as the competitiveness of our industries and the very nature of work continue to evolve. the more canadian businesses refocus, retool and retrain, the more they can take advantage of opportunities in canada and around the world. current economic conditions in canada let me conclude with some comments on current economic conditions in canada, which reflect a number of the themes i have discussed. the recoveries in canada ’ s major trading partners continue to be dampened by the ongoing need to repair sovereign, bank and household balance sheets. as a consequence, the level of external demand for our products in advanced economies remains weak. that said, in recent months, the considerable external headwinds have abated somewhat. european bank funding and sovereign debt markets have stabilized, global financial conditions have improved and risk aversion has decreased. this creates a window for european authorities to address the deep structural issues in their monetary union. while the european situation is far from resolved, the challenges have moved from the acute to the chronic. the u. s. economy remains on the modest growth path typical of recoveries following financial crises. given that context, recent data have been encouraging. monthly employment gains in the past three months have been the fastest in a year. consumer and business confidence have rebounded. and fundamentals for household spending have improved with higher personal income and household net worth. although activity in a number of emerging - market economies has slowed, the emerging world remains the engine of global growth. in particular, past tightening of policy and weaker external demand are slowing activity in china to a still - robust pace. improving global economic conditions have contributed to higher commodity prices, with geopolitical risks adding a further premium on crude oil prices. innovation canada : a call to action, review of federal support to research and development, ” expert panel report, october, 2011. j. manyika, s. lund, b. auguste, and s. ramaswamy, “ help wanted : the future of work in advanced economies, ” mckinsey global institute discussion paper, march 2012. bis central bankers ’ speeches conditions in the canadian economy have also been somewhat stronger and the degree of slack somewhat smaller than the bank had expected. growth has been a bit quicker in recent quarters, reflecting a combination of temporary factors as well as improved confidence and better financial conditions. although net exports have picked up somewhat due to stronger u. s.

consumer goods because of rising unemployment, weak income growth, and the steep declines in household wealth. at the same time, lenders responded to high delinquency rates by tightening credit standards. see the senior loan officer opinion survey on bank lending practices and the survey of terms of business lending ; data are available on the board's website at www. federalreserve. gov / boarddocs / snloansurvey and www. federalreserve. gov / releases / e2, respectively. bis central bankers ’ speeches although mortgage credit conditions remain tight, much of the tightening in other consumer credit markets appears to be unwinding. as indicated on the sloos, the number of loan officers reporting easing standards for consumer loans now exceeds those reporting tightening standards and the willingness of banks to make consumer installment loans has rebounded ( chart 20 ). standards for credit cards are still restrictive relative to those that prevailed before the crisis, but this may be a response to legislation that changed the regulations governing credit cards in addition to economic conditions. but, even here, fewer loan officers reported reducing credit card limits and raising credit card interest rates relative to their cost of funds. i consider the recent signs of new life in the consumer credit markets to be cause for optimism because they suggest that when households do regain confidence in the recovery and are ready to begin spending on consumer goods again, the credit markets will not be as much of a constraint as they were during the recession. indeed, an upside risk to my forecast is that consumers who postponed spending during the past few years could decide to unexpectedly take the plunge and make those purchases. for example, auto purchases seem to be especially good candidates for surprise as the average age of cars on the road indicates pent - up demand and credit is readily accessible. moreover, as households gain confidence that job and income prospects are improving, that should provide a further boost to spending and loan demand. businesses are in an even better position than households to increase spending as confidence returns. corporate cash positions are at record highs, and corporate debt is at similarly low levels ( chart 21 ). although business spending has thus far powered much of the recovery, businesses have still only been spending at a pace sufficient to replace outworn capital and to support increases in capacity that are pretty modest for a business cycle recovery. as businesses become more certain of the durability of the recovery, i expect that they will become more willing to further expand productive capacity, particularly with