BOC Survey: Balance of opinion on indicators of future sales +15 down from +24 in Q1

Q2 Balance of Opinion

+15

The balance of opinion on indicators of future sales in Q2, down from +24 in Q1.

Inflation Expectations (Next 5 Years)

3.39%

Five-year inflation expectations rose from 3.02% in Q1.

Recession Expectation (Next Year)

17%

Percentage of firms expecting Canada to be in a recession over the next year, up from 9% in Q1.

§ 01 Executive Snapshot

What: The Bank of Canada's Q2 survey indicates a decline in the balance of opinion on future sales and rising inflation expectations.
Who: Bank of Canada, Canadian businesses, and consumers.
Why it matters: The results reflect deteriorating business sentiment and inflation concerns, impacting economic forecasts and spending behavior.

Q2 balance of opinion on indicators of future sales is +15, down from +24 in Q1.
Business survey indicator fell to -0.39 from -0.35 in Q1 (revised).
54.6% of Canadians expect a recession in the next 12 months, down from 55.7% in Q1.

The Bank of Canada's surveys show a trend of deteriorating business sentiment after three quarters of improvement, indicating a potential shift in economic outlook.
Rising inflation expectations correlate with higher oil prices and geopolitical uncertainty, which may influence consumer spending and business investment decisions.

Immediate market implications include potential adjustments in consumer spending due to rising inflation expectations and recession fears.
Long-term operational implications may involve businesses reassessing investment and hiring plans amid fluctuating economic indicators and inflation pressures.

Potential risks include regulatory and geopolitical factors influencing inflation and economic stability, as well as market reactions to rising oil prices.
Competition for resources and labor constraints may affect business operations despite current capacity reports.

Future developments to monitor include changes in consumer sentiment and inflation expectations as global economic conditions evolve.
Upcoming data releases from the Bank of Canada will signal the direction of business sentiment and inflation trends, impacting policy decisions.

§ 07

What does the Bank of Canada's Q2 survey indicate?

The survey indicates a decline in the balance of opinion on future sales and rising inflation expectations.

Why is the decline in business sentiment significant?

It reflects deteriorating business sentiment and inflation concerns, which impact economic forecasts and spending behavior.

How do rising oil prices affect consumer spending?

Rising oil prices contribute to higher inflation expectations, which may influence consumer spending and business investment decisions.