Bank of Canada's Business, Consumer Surveys Signal Weaker Sentiment, Higher Inflation Expectations, Says CIBC

Monday's Bank of Canada surveys showed weaker sentiment and higher inflation expectations among businesses and households, though results should be treated cautiously as most responses were collected in May amid elevated oil prices, said CIBC. The BoC's Business Outlook Survey (BOS) showed softer sentiment as higher fuel costs and uncertainty weighed on demand, the bank said in a note. However, export and investment intentions improved above long-run trends, while capacity constraints and labor shortages remained subdued. Inflation expectations rose, with two-year expectations at 3.2%, the highest since 2023, pointed out CIBC's Andrew Grantham. The BoC's Q2 Canadian Survey of Consumer Expectations (CSCE) also released on Monday, posted higher inflation expectations, likely driven by elevated energy prices according to CIBC. These expectations weighed on spending plans, though labor market perceptions improved modestly, particularly among trade-exposed workers.