BoC surveys show business fears of tariff impacts are easing

The Bank of Canada (BoC) released triplicate survey reports on Monday, with the Q2 Business Outlook Survey showing less direct tariff impact in Q2 compared to Q1, while the BoC Business Leaders' Pulse showed less export-focused firms expect worst-case tariff scenarios than before. The BoC's Survey of Consumer Expectations also showed that despite improvements, the average Canadian consumer overwhelmingly expects to face recession conditions in the next year.

Key highlights

• Tariffs and related uncertainty continue to have major impacts on businesses' outlooks.
• Most firms expect to maintain current staffing levels and limit investment to regular maintenance over the next 12 months.
• 23% of firms expect inflation to be above 3% for the next 2 years, unchanged from Q1.
• 43% of firms expect lower labor costs over the next 12 months, 9% see higher labor costs.
• Consumer 5-year inflation expectations have risen to 3.45%.
• 24% of firms reported outright decline in sales over previous 12 months, down from 28% in Q1.
• 28% of firms expect Canada to be in a recession over the next year, down from 32% in Q1.
• Balance of opinion on indicators of future sales drops to -6 from +22 in Q1.
• 64.5% of Canadian consumers expect a recession in the next 12 months, down slightly from Q1's 66.5%.