The Bank of Canada released the fourth-quarter 2024 Business Outlook Survey, indicating that overall business sentiment remained subdued but firms are increasingly expecting sales activity to improve over the coming year. Businesses reported easing growth in wages and other input costs, with selling price growth stabilizing and inflation expectations still within the Bank’s 1% to 3% target range. Interviews conducted from November 7 to 27, 2024 point to soft current demand, with around one-third of firms reporting sales volume declines over the past 12 months, while forward-looking indicators improved and expected sales growth strengthened from a low base, partly attributed to four interest rate cuts since June. Investment intentions rose to well above historical norms but were often described as small increases and remained sensitive to uncertainty, including trade-policy risks. Most firms reported spare capacity, fewer binding labour and capacity constraints, and modest hiring plans. Uncertainty about the new US administration was widespread: in a December Business Leaders’ Pulse question, 40% anticipated negative effects and the most commonly cited channel was higher input costs, with mixed implications for selling prices as some firms planned to pass through costs while others aimed to limit price increases to remain competitive.
Bank of Canada 2025-01-20
Bank of Canada survey shows firms expect stronger sales growth as cost pressures ease and investment intentions broaden
The Bank of Canada's Q4 2024 Business Outlook Survey shows subdued business sentiment, with firms expecting improved sales activity. Wage and input cost growth are easing, selling price growth is stabilizing, and inflation expectations remain within the 1% to 3% target range. Despite improved sales growth expectations and increased investment intentions, uncertainty persists due to trade-policy risks and the new US administration.