Business sentiment was improving, but Middle East war pushing up costs
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The Bank of Canada's latest business outlook survey found that companies expected improvements in sales growth, but follow-up calls revealed higher costs due to the Middle East war. Canadian households also expressed concerns about the conflict's impact on the economy and prices.
The Bank of Canada's quarterly business outlook survey, conducted from February 5 to 25, showed companies expecting improved sales growth and investment intentions. However, follow-up calls in March revealed many firms were already seeing higher costs due to the Middle East war. Businesses reported increased costs for fuel, freight, and fertilizers, with some expecting to pass these costs on to customers. The survey also found that households were concerned about the conflict's implications, with 21% cancelling or postponing trips and 28% reducing major spending. The Bank of Canada's next interest rate decision is set for April 29. The central bank is monitoring inflation expectations and is prepared to act if pressures spread beyond gas prices.
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