Bank of Canada Survey Says Firms' Confidence Weakens, Inflation Expectations Ease After U.S.-Iran Deal
Canadian business confidence weakened in the second quarter after three straight quarters of gains, as higher fuel prices and Middle East tensions dampened sales expectations, said the Bank of Canada in its quarterly Business Outlook Survey (BOS) on Monday. "Compared with the first quarter of 2026, more firms reported that rising input costs and geopolitical uncertainty caused by the war in the Middle East are weighing on business conditions", the bank said. The survey was carried out across 100 firms between May 1 and 21. Export prospects improved as trade uncertainty with the US. eased and commodity demand strengthened, the survey noted. Capacity pressures remained limited despite some input sourcing challenges. Investment intentions remained resilient, supported by strong commodity prices, particularly in the energy sector, where higher oil prices boosted production and capital spending, according to the BOS. However hiring intentions softened and remain below historical averages. Higher oil prices raised expectations for costs, prices, and inflation, though June's U.S.-Iran interim agreement to end hostilities later eased inflation expectations as energy prices fell,.
Canadian business confidence weakened in the second quarter after three straight quarters of gains, as higher fuel prices and Middle East tensions dampened sales expectations, said the Bank of Canada in its quarterly Business Outlook Survey (BOS) on Monday. "Compared with the first quarter of 2026, more firms reported that rising input costs and geopolitical uncertainty caused by the war in the Middle East are weighing on business conditions", the bank said.
The survey was carried out across 100 firms between May 1 and 21.
Export prospects improved as trade uncertainty with the US. eased and commodity demand strengthened, the survey noted.
Capacity pressures remained limited despite some input sourcing challenges.
Investment intentions remained resilient, supported by strong commodity prices, particularly in the energy sector, where higher oil prices boosted production and capital spending, according to the BOS.
However hiring intentions softened and remain below historical averages.
Higher oil prices raised expectations for costs, prices, and inflation, though June's U.S.-Iran interim agreement to end hostilities later eased inflation expectations as energy prices fell,.