The Bank of Canada published its third-quarter 2025 Business Outlook Survey, alongside Business Leaders’ Pulse results and additional outreach with trade-sensitive sectors, showing that firms’ sentiment has improved gradually but outlooks and plans remain subdued. Expectations for domestic and export sales growth stayed soft as businesses continue to focus on the broader economic effects of tariffs and trade tensions, even as perceived uncertainty eased slightly from prior quarters. Recession contingency planning increased to 33% of firms from 28%, while capacity pressures remained limited, with few businesses reporting binding constraints or labour shortages and most not expecting to expand staffing. Investment intentions remained weak, with close to half of firms prioritizing routine maintenance over expansion, and consultations pointed to significant layoffs in steel and aluminum linked to US tariff increases. Cost pressures were still widely reported and often tied to tariffs, but weak demand continued to limit pass-through to selling prices; one-year-ahead inflation expectations were around 3% and longer-horizon expectations remained around 2.5%. Interviews were conducted from August 7 to September 3, with most completed before the announced removal of certain Canadian counter-tariffs.
Bank of Canada 2025-10-20
Bank of Canada survey shows trade tensions keeping business outlook subdued and one-year inflation expectations near 3%
The Bank of Canada's Q3 2025 Business Outlook Survey shows gradual improvement in firms' sentiment, though outlooks remain subdued due to tariff and trade tensions. Recession contingency planning rose to 33% of firms, with limited capacity pressures and weak investment intentions, especially in steel and aluminum sectors affected by US tariffs. Cost pressures persist, but weak demand limits price pass-through, with inflation expectations at 3% for one year ahead and 2.5% longer term.