Canada business outlook sentiment
  • Uptick reported widely across nearly all sectors and regions
  • Future sales improves to +4 from +10
  • Overall indicator to -2.42 from -3.09
  • 27% of firms expect recession in next 12 months from 38% in Q4
  • 40% of firms expect inflation above 3% over next two years, down from 54%
  • 17% of firms think it will take longer than four years to return inflation to 2%, down from 27%
  • Wage growth remains high but firms expect it to slow
  • 74% of firms think wage growth will be back to normal in 2025
  • 24% of firms reported sales declines over previous 12 months, down from 39% in Q4
  • Separate consumer survey sees 52% expecting recession vs 61% in Q4
  • Expectations for 5-year inflation in consumer survey to 3.12% from 2.62%, two-year down to 3.76% from 3.94%

USD/CAD was trading at 1.3585 before the data. Aside from the consumer inflation survey (which is a big one) this is a goldilocks report with improved growth prospects and falling inflation. That said, the Q4 report was particularly bad so there's some element of a dead-cat bounce here.

USD/CAD is largely unmoved on the report, which is a key BOC input.

BOC future sales

This chart is a problem for Canada and something the BOC chastised business for in a speech last week. Canadian productivity is falling and companies aren't investing.

Canada investment intentions

Here is what firms are planning in terms of price increases.

price increases

Here are consumer price expectations.

Canada consumer price expectations