Bank of Canada survey shows subdued sentiment, modest sales outlook

Business sentiment remains subdued, though it has improved from its low in the second quarter of 2025.

Firms continue to cite trade-related uncertainty, slowing demand, and cost pressures as their primary concerns.

However, the share of businesses planning for a recession in Canada over the next 12 months has eased from 33 percent to 22 percent.

Firms reported weak sales growth over the past year, largely due to the economic effects of trade tensions.

Despite this, the balance of opinion on future sales indicators has turned positive, suggesting modest growth.

Inflation expectations remain roughly stable between 2.5 percent and 3 percent across all horizons.

Investment intentions improved slightly, but heightened uncertainty, partly from trade tensions, continues to prioritize routine maintenance over expansion.

Most businesses do not plan to increase their workforce, with staff reduction plans at their highest level since 2016.

In the oil and gas sector, low oil prices are weighing on sentiment, leading to an expected 1.7 percent decline in nominal capital expenditures for 2026.

Despite this, oil sands production remains viable at current price levels due to efficiency gains and improved export pipeline capacity.