Thursday, May 8, 2025

Latest

Canadian Business Sentiment Slumps to Lowest Since 2020 As Price Pressures Bite

Both consumers and businesses are feeling the pressure of persistently high inflation, causing a sharp deterioration in sentiment in an economy that is barreling towards a recession as early at next year.

The Bank of Canada’s quarterly surveys of business and consumer expectations show that sentiment continues to trend downwards as inflation expectations have yet to abate. The central bank’s business outlook indicator slumped from 4.87 to 1.69 in the third quarter, marking the biggest decline since the second quarter of 2020. “Many firms expect slower sales growth as interest rates rise and demand growth shifts closer to pre-pandemic levels,” policy makers wrote.

Although Canadian businesses said they anticipate their input and output prices will subside, they still expect overall inflation to remain entrenched and substantially higher than 3%. At the same time, firms said their sales levels will likely slow over the next 12 months, particularly those focused in the real estate and household consumption sectors as rising interest rates dampen growth. As such, most businesses think there is a 505 chance the Canadian economy will slump into a recession in the next year, largely due to a large increases in borrowing costs and high prices.

Businesses also indicated they don’t foresee substantially high wage growth persisting over the next 12 months, which diverges from a separate Bank of Canada Survey of Consumer Expectations, where 40% of respondents anticipating pay increases of over 4% by the third quarter of next year. While firms are forecasting a slowdown in demand and subsequently holding back on large wage hikes, consumers believe their incomes aren’t keeping up with inflation, and are ultimately adjusting their shopping and spending habits.


Information for this briefing was found via the Bank of Canada. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

First Majestic Posts Record Cash Flows In Q1 As Production Costs Fall

Brazil Potash Secures Funding In Support Of US$2.5 Billion Autozales Project

Related News

Canada Looks To Ban Import Of Russian Oil

Well, it’s official. Canada is formally looking to ban imports of oil from Russia on...

Monday, February 28, 2022, 10:45:05 PM

Liberal Government Vows to Continue Spending, Extends Wage and Rent Subsidies by $15 Billion

Despite what appears to be a strengthening economic recovery, Canada’s Finance Minister Chrystia Freeland vowed...

Thursday, March 4, 2021, 11:51:00 AM

Canada Sees April’s CPI Climb To 6.8% While Price Of Food Climbs 9.7%

Inflation in Canada continues to climb, with StatCan this morning reporting that the Canadian consumer...

Wednesday, May 18, 2022, 09:27:00 AM

Canadian Federal Government Releases Fiscal Update Regarding Mounting Coronavirus Costs

As Canada begins the economic recovery phase from the coronavirus pandemic, the federal government has...

Thursday, July 9, 2020, 01:06:49 PM

Canada’s Liberals Surge to 6-Point Lead Under Carney, Ipsos Poll Finds

Canada’s Liberal Party has expanded its lead over the opposition Conservatives, according to an Ipsos...

Friday, March 21, 2025, 07:55:18 AM