In recent months, we’ve repeatedly written about how the Bank of Canada (BoC) expects rising exports and an increase in business investment to take over as the main drivers of the Canadian economy. In the near term, the country’s economy faces challenges from weakening domestic demand and significant uncertainty regarding the strength of the global economy.

hat reality is borne out by the BoC’s quarterly survey of the 100 businesses it deems most representative of the different components of the country’s gross domestic product (GDP). The central bank’s “Business Outlook Survey” found that weak demand and uncertainty regarding future demand had made firms cautious about investment decisions.

Part of the problem is that sales growth has been anemic. While a bare majority (57 percent) of firms reported sales were growing at the same rate or higher over the past 12 months as they did over the prior period, a substantial minority (44 percent) said the pace of growth had declined.

That’s a disappointing result following the survey’s rebound last quarter from the spring’s dismal numbers. The summer survey showed 66 percent of firms had enjoyed sales growth that was the same or higher than the prior period, compared to just 53 percent of firms in the spring survey.

The good news is that sentiment for future sales growth is at its most positive level since early 2012, with 52 percent of firms expecting sales to rise at a faster pace over the next 12 months, while 26 percent expect volumes to be about the same. But that relative optimism hasn’t yet translated into hiring and investment in machinery and equipment.

Employment intentions remain near post-recession lows, with 58 percent of firms stating that they’ll likely maintain or decrease their present workforces over the next 12 months. Similarly, 67 percent of firms believe investment in machinery and equipment will be the same or lower over the coming year, which is the most cautious outlook since late 2009.

Indeed, most firms have aligned their production capacity with the sluggish operating environment. As such, a slight majority admit that they would have at least some difficulty accommodating a sudden spike in demand.

Our understanding of the BoC’s outlook, however, is that a rise in exports would necessarily precede a corresponding jump in business investment. So while the business outlook is somewhat gloomy at present, it’s more a reflection of the recent past than what is likely to happen in the future. After all, the same polling conducted toward the end of 2009 showed that few firms were anticipating the resurgence that occurred the following year (and was likely already underway).

And Canada’s exports are rising, just not at a fast enough pace or across enough industries to make a net contribution to economic growth. Of course, much of that depends on the growth trajectory of the US economy, which faces considerable uncertainty of its own.

Despite these challenges, Canadian stocks have still managed to produce positive gains so far this year. Though it’s been a rocky climb, with extended selloffs in April and June, the S&P/TSX Composite Index is up 8.4 percent on a dividend-reinvested basis.

Meanwhile, the S&P/TSX Equity Income Index, whose constituents include many of the stocks that comprise the Canadian Edge coverage universe, is up 12.5 percent over that same period, thus demonstrating the power of the payout to help investors endure volatility.

These results show that while economic uncertainty does weigh on the market’s performance, it’s not always enough to send investors scurrying to the sidelines. For now, both businesses and investors have clearly adopted a “show me” mentality, which means they await greater evidence of growth before meaningfully committing their capital.