- Uptick reported widely across nearly all sectors and regions
- Future sales improves to +4 from +10
- Overall indicator to -2.42 from -3.09
- 27% of firms expect recession in next 12 months from 38% in Q4
- 40% of firms expect inflation above 3% over next two years, down from 54%
- 17% of firms think it will take longer than four years to return inflation to 2%, down from 27%
- Wage growth remains high but firms expect it to slow
- 74% of firms think wage growth will be back to normal in 2025
- 24% of firms reported sales declines over previous 12 months, down from 39% in Q4
- Separate consumer survey sees 52% expecting recession vs 61% in Q4
- Expectations for 5-year inflation in consumer survey to 3.12% from 2.62%, two-year down to 3.76% from 3.94%
USD/CAD was trading at 1.3585 before the data. Aside from the consumer inflation survey (which is a big one) this is a goldilocks report with improved growth prospects and falling inflation. That said, the Q4 report was particularly bad so there's some element of a dead-cat bounce here.
USD/CAD is largely unmoved on the report, which is a key BOC input.
This chart is a problem for Canada and something the BOC chastised business for in a speech last week. Canadian productivity is falling and companies aren't investing.
Here is what firms are planning in terms of price increases.
Here are consumer price expectations.
