The Bank of Canada (BoC) reported on Monday its Business Outlook Survey indicator fell from a strongly positive level in the winter survey and is now slightly negative, suggesting a softening in business sentiment.
- Firms’ expectations for sales remain positive but have softened as several businesses are less optimistic about demand
- The main headwinds are a more uncertain outlook in the Western Canadian energy sector, continued weakness in housing-related activity in some regions, and tangible impacts from global trade tensions
- Investment and employment intentions remain healthy outside the Prairies; plans to increase capital spending and add staff are most common among firms in the services sector facing sustained demand
- The share of businesses reporting capacity pressures has declined to a low level, with some firms pointing to recent additions of capital and labor while others cite a moderation in demand; indicators of labor shortages have also moved down
- Firms anticipate input and output price growth to stabilize, reflecting ongoing competition, rising commodity prices and fading pressure from tariff-related cost increases.
- Inflation expectations have declined but are still concentrated in the Bank of Canada’s 1 to 3 percent inflation-control range
- Credit conditions eased marginally over the past three months