BoC Survey Shows Canadian Business Sentiment Still Weak Despite Slight Uptick

10:58 AM EDT, 10/20/2025 (MT Newswires) -- Canadian firms' outlooks and intentions remain subdued despite a gradual improvement in sentiment and a slight easing of perceived uncertainty, said the Bank of Canada in its Q3 Business Outlook Survey (BOS) published Monday.

Expectations for growth in domestic and export sales remain soft due to concerns about the broad economic effects of trade tensions, noted the central bank in the Q3 BOS.

The business outlook indicator -- a summary measure of results from key questions in the BOS -- rose to a negative 2.28, stated BoC. In the Q2 BOS, it was a negative 2.4, which was the lowest in a year.

The share of firms planning for a recession in Canada -- for example, by tightening their budgets or pausing investments -- has increased slightly, from 28% to 33%. This share remains above the low levels seen in 2024, likely reflecting ongoing concerns about the impacts of trade tensions with the United States.

Few firms reported binding capacity constraints or labor shortages, and most businesses do not expect to increase current staffing levels, added the BOS.

Soft demand and uncertainty related to trade tensions persist in holding back investment intentions, with close to half of firms prioritizing routine maintenance over expansion.

Businesses continue to expect cost increases due to tariffs and trade uncertainty, found the BoC survey. However, many said that weak demand is limiting their ability to pass these cost increases through to their selling prices.

Firms' one-year-ahead inflation expectations are below the peak reached earlier in the trade conflict with the U.S. and are now only slightly above late-2024 levels.

The BOS was conducted by in-person, video and phone interviews from Aug. 7 to Sept. 3.

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