Two new Bank of Canada surveys suggest Canada's business community believes 2009 will bring little cheer, with continued challenges getting consumers to buy their products and services in the face of a deepening recession.

For starters, businesses participating in the most recent quarterly Business Outlook Survey reported their gloomiest expectations for the economy since the survey began in 1997. Survey data was collected between Nov. 14 and Dec. 12 -- a time period which followed a decline of many major worldwide economies.

In Canada, 71,000 jobs were lost in November, followed by another 34,000 jobs in the final month of the year. Some economists have suggested that Canada could see up to 200,000 job losses from the economy in 2009 before an expected turnaround in 2010.

Overall, the 100 businesses participating in the survey predicted that their sales will decline in the next 12 months. And as a whole, they held negative balances of opinions for both investment and employment over the same period.

Nearly two-thirds of these businesses reported dealing with tighter credit conditions, which the survey said marked "a record-high level in the winter survey."

The businesses surveyed also said it will also not be an easy task to find a job in 2009, as they expect fewer jobs will become available -- though the outlook is better for people working in the services sector.

"The balance of opinion on employment has turned negative for the first time in the survey's history, indicating that firms expect the level of employment to contract over the next 12 months," the outlook survey reports.

"Hiring intentions are lower among firms in the good sector than those for operating in the services sector."

Bank of Montreal Deputy Chief Economist Douglas Porter said the confidence of Canadian businesses appeared to take a turn for the worse along with the economy in the final quarter of last year.

"The direction is certainly not a surprise, but the suddenness with which some of these indicators swung from positive to negative and the depth some declined further into the red is quite eye-opening," Porter said.

The Bank of Canada also released its Senior Loan Officer Survey Monday, conducted between Dec. 15 and Dec. 19, which reported that credit continued to tighten throughout the reporting period for both "pricing and non-pricing aspects of business-lending conditions."

"The pricing responses reflect the efforts of financial institutions to pass on to borrowers the increase in their own borrowing costs relative to risk-free rates," the Senior Loan Officer Survey reports.

"The non-pricing responses indicate a tightening in the terms and standards for loans and/or limits on the funds allocated to some sectors."

Extraordinary thinking required

Finance Minister Jim Flaherty said on Monday that Canada is caught in the midst of "extraordinary times" with a worldwide recession.

"This is not a cutting exercise. We are in extraordinary times. It calls for some extraordinary thinking," Flaherty said during a visit to Victoria as part of a series of pre-budget consultations.

"The deficit will be substantial."

However, Flaherty didn't say how big the deficit would be when he tables the budget on Jan. 27. He told reporters he would receive new economic numbers later this week.

On Monday, Statistics Canada released two other reports that described declines in Canada's housing and tourism sectors in the final months of 2008.

In November, the new housing price index saw its smallest monthly increase -- 0.9 per cent -- since August 1999, StatsCan reported.

The statistical agency also reported that tourism spending dropped 0.7 per cent in the third quarter of last year -- ending a period of growth that began following the SARS scare of 2003.

With files from The Canadian Press