Canada - BoC Q1 Business Outlook Survey - Stronger but not fully catching war impact
The Bank of Canada’s Q1 business outlook survey released earlier today was generally improved, with the business outlook indicator of -0.36 from -1.78 the strongest since Q4 2022, with respondents reporting less of a drag from trade tensions. The survey may be however overstating current optimism, with some responses having been received before the outbreak of war.
Balances on future sales, investment and employment were all improved, with the first two at their highest since Q4 2024, in the pre-tariff era. and employment the highest since Q1 2023. Indicators on input and output price inflation slowed.
The proportion seeing inflation above the 2% target increased, though more saw it a 2-3% rage with fewer seeing it above 3%. Still the BoC noted that responses received after the outbreak of war saw significantly higher inflation than those seen before the outbreak of war. This suggests that optimism on activity may be somewhat dated.
