The Central Bank survey on business prospects stresses that companies’ confidence is “still moderate”, but that it has improved compared to the strong decreases recorded in March and April 2025.
Some 28 % of companies are now preparing for a recession in Canada, compared to 32 % in the previous quarter, but still up compared to the 15 % of the two previous quarters, can be read.
“Customs duties and trade tensions continue to weigh on the prospects of many companies. In some cases, the negative effects on costs and sales provided by most companies in the previous quarter have materialized, and those affected expect that these effects persist, “specifies the report.
“At the same time, companies have moderated their expectations in terms of negative repercussions.”
According to the report, a third of companies expected an increase in costs related to customs duties this quarter, against about two thirds in the last quarter.
“Nevertheless, uncertainty surrounding the financial, economic and political conditions remains the main concern of businesses,” read.
“The concerns about the direct impact of customs duties on Canadian companies have slightly reduced, but new concerns have emerged as to the more general repercussions of customs duties on the global economy and on demand in Canada.”
-Extract of a report from the Bank of Canada
The report stresses that uncertainty continues to curb companies in their new investment projects, which continues to manage their finances in a prudent manner.
The prospects for sales remain generally pessimistic due to generalized concerns concerning the effects of economic slowdown, but the report specifies that the recent monthly surveys suggest a certain improvement in the perspectives of companies.
This is particularly the case for exporters, because few of them have been directly affected by current customs duties. However, exporters currently subject to American customs duties, such as steel and aluminum manufacturers and companies in the automotive sector, continue to report gloomy perspectives.
The weakness of short -term sales forecasts is largely due to the “vast repercussions of the trade conflict,” said the report.
This includes the weakness of the spending of companies in services and equipment, the weakness of consumer spending or fears that consumers are starting to spend less, the prospects of the real estate sector and the prospects for mediocre sales among oil and gas companies.
Downward expenditure intentions
In addition, the survey on consumers’ expectations indicates that spending intentions have further decreased due to the persistent threats of customs duties.
Consumers also continue to perceive the labor market as sluggish, in a context of fears increased by job losses.
“The trade conflict pushes consumers to be more and more cautious about their spending projects and to change their consumption habits,” said the consumer expectations of consumers in Canada, adding that many respondents said they wanted to favor Canada and the purchase of Canadian products.
Consumers’ short -term inflation expectations have hardly changed since their high rise in the first quarter of the year.
“Consumers expect high increases in motor vehicles in the next 12 months, but their expectations relating to the growth in essential goods and services have decreased this quarter,” read.
“More respondents have said that customs duties are the most important factor that affects the capacity of the Banque du Canada to control inflation.”
The investigation into business prospects was carried out between May 8 and 28, while the consumer expectations were carried out between April 24 and May 15, with follow -up telephone interviews between May 20 and 26.
These reports precede the next decision of the Bank of Canada on interest rates and the publication of its report on monetary policy, scheduled for July 30.
The Sharon Kozicki sub-government said in a speech delivered last month that the Banque du Canada was based more on alternative data sources, such as surveys, in order to reduce part of the uncertainty linked to traditional economic data.
The central bank maintained its key rate unchanged at 2.75 % in April and June.
