Bank of Canada reported on Monday its latest Business Outlook Survey (BOS)
revealed that the Canadian firms’ business sentiment remained relatively flat
in the second quarter of 2024 compared to the first quarter, with a balance
of opinion of 21 per cent (up slightly from 17 per cent in the previous survey).
The BoC noted that firms indicated elevated interest rates, weak demand,
and particularly for non-essential goods and services ongoing high costs as
factors that weighed on business sentiment.
The survey also found that sales outlooks were mostly unchanged in the
second quarter and remained more pessimistic than average.
Meanwhile, businesses’ investment spending plans also remain below
average. “Weak demand, elevated interest rates, uncertainty about the business
environment and the high cost of machinery and equipment were cited as
discouraging investment,” the BoC said.
In addition, the survey showed that businesses expect the growth of
their input prices and selling prices to slow. Overall, firms’ one-year-ahead expectations
for inflation decreased in June to 2.9 per cent (down from 3.3 per cent in the
previous survey), entering the BoC’s inflation-control range.