Canadian businesses reported better third-quarter sales prospects, but most planned to maintain existing staffing. The Bank of Canada’s main interviews largely preceded the breakdown in US trade talks. Later responses showed renewed pressure from tariffs and oil prices, partly reversing the earlier improvement in sentiment and adding to inflation expectations.
The Bank of Canada’s third-quarter Business Outlook Survey found improved business sentiment after deterioration in the preceding quarter. Firms reported better domestic and export sales prospects, while hiring intentions remained soft. Most businesses planned to keep staffing unchanged. Investment intentions eased slightly but remained robust.[1], [2]
Main interviews ran from August 6 to September 2, with about three-quarters completed before Canada-US trade negotiations broke down and new Canadian counter-tariffs were announced. The share of firms planning for a recession over the next twelve months fell from 17 per cent to 6 per cent, the lowest since the question began in 2023.[1]
Solid US demand and elevated oil prices supported export outlooks. Trade uncertainty restrained some investment plans, while stronger demand and high commodity prices supported spending elsewhere. Most firms still reported spare capacity.[1]
Later monthly responses showed renewed pressure on inflation expectations after trade talks collapsed and oil prices rebounded. Expectations for input and selling-price growth had moderated but remained elevated. Roughly half of firms planned to pass through war- and tariff-related costs, with competition limiting some price increases. Businesses described adapting through supplier changes, automation, new export markets and, in some cases, reduced capacity or employment.[1]
