Notes from the Desk – Canadian Business Outlook Survey
Q3 saw Canadian business sentiment experience its third-largest drop, behind only the Great Financial Crisis and the pandemic.
Although expectations for sales, cap-ex, and hiring all declined, 77% of firms still anticipate inflation to remain above 3% in 2023. The majority of respondents also felt that there was at least a 50% chance of recession next year.
There are small signs that supply chain issues are subsiding, but some businesses are still having difficulty with labour shortages. Overall, firms are expecting wage growth to edge lower from 5.8% to 4.9%. Interestingly, only 40% of workers believe pay raises will be over 4%.
Today’s data keeps the Bank of Canada on track to hike either 50 or 75 bps next week (Wednesday’s CPI will likely be the decisive factor).