Latest news with #BusinessOutlookSurvey
Global News
21-07-2025
- Business
- Global News
Will Bank of Canada cut rates next week? How new data factors into the call
While the latest Bank of Canada survey data suggests both businesses and consumers are in need of more financial relief amid the trade war, many economists doubt the central bank will cut rates on July 30. Most business owners are feeling less pessimistic about a potential recession than earlier this year, but still say they're feeling 'subdued,' according to the results of the latest Business Outlook Survey released by the Bank of Canada on Monday. 'Business sentiment, although still subdued, has improved from the sharp declines recorded in March and April 2025,' the Bank of Canada says in its summary of the survey findings. 'The share of firms planning for a recession in Canada has declined slightly, from 32 per cent (at the end of March) to 28 per cent (at the end of June), but remains above 2024 levels, reflecting ongoing concerns about trade tensions.' Story continues below advertisement The Bank of Canada also reports that consumers share a similar outlook, in that many are holding off on big-budget purchases or other long-term commitments because of the uncertainty surrounding the trade war and tariffs. 'A higher-than-usual share of consumers said the future is particularly hard to predict right now. Households are reacting to uncertainty by reducing spending, delaying major purchases, and increasing savings,' the Bank of Canada says in its findings. 'This, in turn, makes it more difficult for businesses to understand how demand conditions will evolve.' The Bank of Canada last cut interest rates in March. What have businesses been saying? The report shows how the trade war has led many businesses to make changes in anticipation of higher costs as a result of U.S. President Donald Trump's tariff policies. Story continues below advertisement For example, in order to avoid having to increase prices for consumers, the survey shows most businesses are 'absorbing' these costs — even if it means making less profit. 'Tariff-related cost increases are also putting upward pressure on firms' expected selling prices,' the Bank of Canada says in its survey summary. 'Because customers are sensitive to price increases, many firms are absorbing a portion of these increased costs, compressing their profit margins in an effort to preserve market share.' 2:02 Business Matters: Canada's unemployment rate drops slightly in June This method of maintaining a customer base by not raising or minimally raising prices, while seeing less profit from higher costs, may work for the short term, but may not last long. Get weekly money news Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday. Sign up for weekly money newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy 'The reality is businesses can't cut their margins for that long, and it means they're going to have to either eventually raise prices or find efficiencies elsewhere,' says Doug Porter, chief economist at the Bank of Montreal. Story continues below advertisement 'If you're not earning a decent rate of return (profits), then you're probably not going to invest for the future.' Other ways businesses reported they are adapting to tariffs and uncertainty include cutting costs where possible, as well as finding new suppliers beyond the United States. In the case of cutting jobs, most businesses reported that doing so was a 'last resort.' Although there were some job cuts in the spring, with thousands of manufacturing jobs shed in particular, the June report on the labour market showed Canada was starting to add jobs back. Still, the uncertainty of the trade war is the biggest concern for businesses, according to the report, and given the ongoing trade talks between Prime Minister Mark Carney and Trump, many businesses are holding off on any investment in expansion plans until there is more clarity. 'Changing trade policies mean that businesses do not know if and when tariffs will be imposed and how long they will last. This particularly affects firms directly involved in international trade,' the Bank of Canada says in its report. 'Faced with high uncertainty, firms are reluctant to make costly and hard-to-reverse decisions that may not be appropriate if trade policy or economic conditions change.' By absorbing some cost increases, holding off on investing, improving efficiencies and maintaining customer bases, the report suggests businesses may be able to tread water for now amid the uncertainty surrounding the trade war. Story continues below advertisement However, it likely isn't sustainable for businesses in the long term. 'As long as this uncertainty or lack of clarity lingers on the trade front, you're going to get businesses very reluctant to commit, to invest for the longer term,' Porter says. 'I think that's really the damage that the trade war and the uncertainty does, is it just keeps businesses locked in place. And let's face it, to expand, to improve productivity, to grow our incomes, we need business investment. We need capital spending.' 2:12 Trump's tariffs on Canada might be here to stay, U.S. Secretary of Commerce says What does this mean for interest rates? In line with its mandate to promote the economic and financial welfare of Canada, the Bank of Canada aims to keep inflation within a target zone — between one and three per cent per year — and it uses interest rates to try to achieve that goal. Story continues below advertisement To do that, the central bank adjusts interest rates to eventually hit a sweet spot, or what the Bank of Canada calls a 'neutral' level, where Canadian households and businesses are able to afford current borrowing costs while still allowing the economy to grow at a sustainable pace. But the Bank of Canada is making those decisions in an environment rife with uncertainty and where many businesses and consumers are feeling the pain of rates that are historically normal but higher than what many have been used to over recent years. Lower interest rates would, for instance, bring down monthly costs for those with variable-rate loans like a mortgage. At the same time, lower rates also spur consumers to spend more. If borrowing costs are too low, then the ripple effect is that prices for goods and services like food and shelter could rise out of control. On the other hand, if rates are too high, then economic growth can slow down or even reverse into a recession, as it may be too difficult for most consumers and businesses to borrow money and lead them to tighten their belts more generally. The most recent inflation report showed prices increased in June by 1.9 per cent — within the central bank's target range. Story continues below advertisement One of the other factors the Bank of Canada will consider? The recent jobs report from last month, as a strong job market usually means Canadians are better able to afford monthly costs, including from loan interest. 'We saw a strong gain in employment and a decline in the jobless rates (in June),' Porter says. 'So that reduced the pressure on the Bank of Canada to cut rates.' So the Bank of Canada may not make any changes to rates on July 30, based on what most economists are predicting. Porter says the central bank may still cut rates later this year, but a lot will depend on 'if we can reach some kind of a trade deal with the U.S., even if it's just a framework — as long as it provides some clarity.'
Yahoo
21-07-2025
- Business
- Yahoo
Tariff fears ease, but Canadian firms still hold off on investment
-- Firms surveyed by the Bank of Canada describe a cautious approach to business planning as trade tensions and tariffs continue to affect expectations for sales, investment, and hiring. The central bank's second-quarter Business Outlook Survey indicates that while some firms see fewer downside risks than earlier in the year, overall sentiment remains subdued. The survey, conducted from May 8 to 28, 2025, shows broad concerns among businesses regarding weak demand tied to macroeconomic uncertainty. According to the report, more firms reported that sales indicators, such as advance bookings and client inquiries, had deteriorated over the past 12 months than had improved, with exporters noting a slowdown following earlier inventory build-up ahead of new tariff measures. The second-quarter data show that expectations of tariff-related cost pressures have moderated compared with the first quarter. The Bank said that around one-third of businesses now expect higher input costs from tariffs, a drop from about two-thirds in the prior survey, as the scope of implemented tariffs has proven narrower than previously anticipated. 'Roughly half of participants in the Bank of Canada's Business Outlook Survey reported difficulty forecasting conditions for their business in the near term.' The report also noted that 'forming an outlook is complicated in the current environment because of multiple layers of uncertainty.' Responses in the survey point to muted investment intentions across most sectors, with firms highlighting soft demand, sufficient existing capacity, and external uncertainty as the key reasons for postponing or limiting capital expenditures. A greater share of firms reported focusing their investment activity on routine maintenance instead of expansion, a trend the Bank of Canada identified as more pronounced in capital-intensive and trade-exposed industries. Tariff-related costs were reported as a continuing factor in input price pressures, though firms indicated limited ability to pass higher costs onto consumers. According to the survey, competitive conditions and weaker demand are constraining pricing power, leading some businesses to absorb the increases, with implications for operating margins. The Bank of Canada's findings also reflect subdued hiring outlooks, as fewer firms than usual plan to increase staffing levels. Survey respondents indicated that the share of companies looking to fill vacant roles or hire for expected growth remained below historical averages, while expectations for larger-than-normal wage increases continued to decline. Near-term inflation expectations among businesses fell back to levels observed at the end of 2024, the Bank reported. Firms cited tariffs as the primary contributor to input price growth, but also noted that weak consumer demand is contributing to disinflationary forces. Taken together, the Bank of Canada's second-quarter survey suggests that while fears over severe trade disruptions have eased, businesses continue to operate under considerable uncertainty. Firms appear to be prioritizing stability over expansion, with many adopting a wait-and-see approach as they assess evolving trade policies and broader economic conditions. Related articles Tariff fears ease, but Canadian firms still hold off on investment - BoC survey Clients buying into summer rally, bracing for later pullback, says BofA's Hartnett Risks Rising? Smart Money Dodged 46%+ Drawdowns on These High-Flying Names Sign in to access your portfolio
Business Recorder
21-07-2025
- Business
- Business Recorder
Mining shares boost TSX; investors await trade updates
Canada's commodity-heavy main stock index on Monday rebounded from the previous session's losses, led by gains in mining stocks, while investors looked for potential trade deals between the U.S. and its key trading partners. The S&P/TSX composite index was up 0.2% at 27,372.76 points. In the latest trade development, U.S. Commerce Secretary Howard Lutnick said on Sunday he was confident that Washington could secure a trade deal with the EU, but August 1 is a hard deadline for tariffs to kick in. However, EU diplomats said the 27-member bloc is exploring a broader set of possible counter-measures against the U.S., as hopes for a breakthrough deal with Washington dwindled. Traders awaited clarity on U.S.-EU trade talks and looked for additional deals from major U.S. trading partners ahead of President Donald Trump's August 1 tariff deadline. 'It (aspects of a potential trade deal) just seems to go back and forth…trying to forecast what's going to happen has consistently got investors burned over the past few months', said Josh Sheluk, portfolio manager at Verecan Capital Management. He added that it is better for investors to stay patient and avoid getting caught up in the daily noise around tariffs. Meanwhile, domestic investors looked forward to the Bank of Canada's Business Outlook Survey, due later in the day, for business expectations amid tariff-related uncertainty. On the TSX, materials stocks led the sectoral gains with a 2.3% rise, tracking gold prices. Energy subindex fell 0.4% as oil prices slightly dipped. Among individual stocks, Osisko Development rose 2.2% after the mineral exploration company announced a $450 million credit agreement with funds advised by Appian Capital Advisory. In the U.S., several industrial and tech firms are set to report their earnings this week, with Alphabet and Tesla kicking off the results season for the 'Magnificent Seven' stocks.
Yahoo
21-07-2025
- Business
- Yahoo
Business confidence subdued amid tariffs but 'worst-case' less likely: BoC survey
A pair of reports from the Bank of Canada say tariff-related uncertainty continued to put a damper on business and consumer sentiment in the second quarter, but the worst-case trade scenarios previously anticipated seem less likely. The central bank's business outlook survey said 28 per cent of firms are now planning for a recession in Canada, down from 32 per cent last quarter but still up from 15 per cent over the previous two quarters. Sales outlooks remain pessimistic overall due to widespread concerns about the effects of a slowing economy, but the report says recent monthly surveys suggest some improvement in firms' outlooks, especially among exporters because few have been directly affected by current tariffs. Meanwhile, the Canadian survey of consumer expectations says spending intentions have weakened further because of persistent tariff threats. Consumers also continue to see the labour market as soft amid "elevated" fears of job loss. The reports come ahead of the Bank of Canada's next interest rate decision and monetary policy report set for July 30. This report by The Canadian Press was first published July 21, 2025. Sammy Hudes, The Canadian Press Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Market Online
21-07-2025
- Business
- The Market Online
TSX Edges Higher Amid Mixed Commodity Signals
The TSX is creeping higher this morning as investors brace for the Bank of Canada's Business Outlook Survey—digging for clues on how corporate Canada's really feeling under the weight of tariff turmoil. Market Numbers (Futures) TSX : Up ( 0.02%) 27,368.64TSXV: Up (0.77%%) 797.75DOW: Up (0.23%) 44,641.00NASDAQ: Up (0.25%) 23,281.25 FTSE: Down (0.10%) 8,982.96 In the Headlines: With a high-stakes vote on the horizon, Canadians are questioning whether Canada Post still matters in a digital age, or if it's just snail mail dragging its feet. And Alaska Airlines resumes operations after it shakes off a massive tech meltdown that grounded its entire fleet, rebooting operations but leaving travel chaos in its wake. Currencies Update: (Futures) The Canadian dollar dips 0.19% to $0.7313 cents U.S., but it holds a firmer line against the euro down 0.18% to $0.6244. Meanwhile, Bitcoin inches higher by 0.44%, landing at C$163,150.67 Commodities: (Futures) Natural Gas: Down: Up (4.46%), 3.41WTI: Up (0.04%), 67.33Gold: Up (0.77%), 3,376.49 Copper: Up (0.36%) 6.05 To stay up-to-date on all of your market news head to Join the discussion: Find out what everybody's saying check out the rest of Stockhouse's stock forums and message boards. The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here
