Highlights from the Bank of Canada's key Business Outlook Survey for Q3:
- Business confidence has softened
- Most businesses think a recession in Canada is likely within 12 months
- Many firms expect slower sales growth
- Pressures on production capacity are still high, though labor and supply chain bottlenecks have eased
- Pressures on prices and wages have started to ease but firms' inflation expectations remain high
- Businesses with sales linked to housing activity and household consumption expect weaker sales growth due to rising interest rates
- For the first time in the past five quarters, businesses reported that their supply chains had improved compared with three months ago
- Futures sales -18 vs -26 prior
This survey should go a long way towards a Bank of Canada pivot near year-end, possibly with a signal on Oct 26. At that meeting, the BOC is 70% priced for 50 bps with the remainder at 75 bps.