Bank of Canada publishes fourth-quarter 2025 Business Outlook Survey showing subdued sentiment and inflation expectations holding at 2.5% to 3%

The Bank of Canada published the fourth-quarter 2025 Business Outlook Survey, based on interviews conducted from November 6 to 26, 2025 and complemented by Business Leaders’ Pulse results for October to December 2025 and special consultations in the oil and gas sector. The survey points to subdued business sentiment amid trade-related uncertainty, with firms reporting weak sales growth over the past year but expecting only a slight improvement and limited near-term pricing pressure. Recession planning for the next 12 months eased to 22% of firms from 33%, while one-third reported declining sales volumes over the past year. Indicators of future sales turned positive but remained below historical averages, and 33% of firms reported being strongly impacted by US trade policies, with weaker past and expected sales growth than other firms. Exporters generally reported Canada-United States-Mexico Agreement-compliant goods as tariff-exempt, but continued to face soft US demand and policy uncertainty; most have not diversified beyond the United States, although a small but growing share reported higher sales to non-US markets. Capacity constraints and labour shortages were not widespread, and most firms plan to maintain or reduce staffing, with the share planning staff reductions rising to its highest level since 2016. Investment intentions improved slightly toward long-run norms but remained focused on routine maintenance, and oil sector investment is expected to decline in 2026 due to low oil prices. Firms reported fewer tariff-related cost pressures than the prior quarter, fewer anticipated significant input or selling price increases, wage growth expectations stabilized, and inflation expectations stayed roughly steady between 2.5% and 3%.