OTTAWA- Canadian firms anticipate stronger demand as the COVID-19 pandemic fades but many say supply constraints will limit sales and put upward pressure on costs, a regular Bank of Canada survey said on Monday.

The central banks's Business Outlook Survey Indicator reached its highest level on record in the third quarter survey.

"Positive business sentiment is common across regions and sectors. Most firms continue to anticipate healthy growth in both domestic and foreign demand," said the survey.

More firms are facing supply-side challenges such as labor shortages, it added. Supply chain disruptions are more prevalent and many businesses expect they will continue until the second half of 2022.

"Businesses see these constraints affecting their sales and cost structures ... firms intend to continue passing increases in labour and other input costs on to their customers," it said.

The traditional business survey of about 100 firms was conducted from Aug 20 to Sept 16.

(Reporting by David Ljunggren, Editing by Steve Scherer)

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