Bank of Canada surveys reveal declining business confidence and rising inflation expectations among firms and consumers.
Canadian businesses lowered their sales outlook for the second quarter, with the balance of opinion on future sales dropping to +15 from +24 in Q1. The decline reflects weaker economic sentiment amid persistent inflation concerns and recession fears.
The Business Outlook Survey indicator fell to -0.39 from a revised -0.35 in Q1, signaling deteriorating confidence. Meanwhile, 44% of firms now expect inflation to remain above 3% for the next two years, up sharply from 11% in Q1. Recession expectations among firms also rose, with 17% anticipating a downturn within the next year, compared to 9% previously.
Consumer sentiment showed mixed signals, with five-year inflation expectations rising to 3.39% from 3.02% in Q1. However, the share of Canadians expecting a recession over the next 12 months edged down to 54.6% from 55.7% in Q1.