Bank of Canada business outlook survey highlights growing pessimism

• Business sentiment 21% vs 17% prior
• Firms’ sales outlooks are mostly unchanged from last quarter and remain more pessimistic than average
• Businesses tied to discretionary spending reported particularly weak
  sales expectations, while those tied to essential spending see
  population growth continuing to benefit their sales.
• Investment spending plans also remain below average
• The share of firms reporting labour shortages is near survey lows
• Future sales indicator -1 vs +4 prior
• Businesses expect inflation to average 2.9% over the next two years, down from 3.2% in the previous quarter and closer to the Bank of Canada’s 2% target
• The share of firms planning larger-than-normal price increases has fallen to 21% for the next 12 months, down from 27% in 2023.

Firms tied to discretionary spending:

This is a red alert for the Canadian jobs market as the share of companies seeing labor shortages falls to survey lows.

Businesses expect inflation to average 2.9% over the next two years, down from 3.2% in the previous quarter and closer to the Bank of Canada’s 2% target

This article was written by Adam Button at www.forexlive.com.