- BOC indicator 4.98 vs record 5.90 prior
- 81% of firms report capacity pressures -- a record high up from 78%
- Firms expect significant growth in wages, input prices and output prices due to demand and capacity pressures
- Future sales indicator +39% vs +57% prior
- Intensity of labour shortage 62 vs 74
- Investment intentions 42 vs 47
- Hiring intentions 63 vs 77
- Output prices 26 vs 16
- 43.6% of businesses see inflation near 2% within two years vs 50.6% prior
- Full report
The interviews were conducted before the Russian invasion of Ukraine but the BOC supplemented it with a special online survey afterwards, with about half of firms saying they expected to see effects, mostly via inflation.
There's clearly a slowdown but it's from extremely-elevated levels so it's not a surprise at all. What's notable for me is the pickup in output prices, which is a sign that companies are getting more comfortable about passing on price increases.
There is still confidence that the BOC will get inflation back to 2% but it's eroding, according to the survey.
The loonie was largely unchanged on the report but it adds to by conviction the BOC will hike by 50 bps.
Have a look at this chart on expected wage gains:
