{"id":227993,"date":"2025-10-20T23:21:11","date_gmt":"2025-10-20T23:21:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/227993\/"},"modified":"2025-10-20T23:21:11","modified_gmt":"2025-10-20T23:21:11","slug":"bank-of-canada-finds-downbeat-businesses-and-consumers-ahead-of-rate-decision","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/227993\/","title":{"rendered":"Bank of Canada finds downbeat businesses and consumers ahead of rate decision"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

An employee works at Finica Food Specialties’ warehouse in Mississauga, Ont., in July. A Bank of Canada survey finds most companies don’t intend to hire new employees over the next year.Laura Proctor\/The Globe and Mail<\/p>\n

Canadian businesses expect soft sales and little hiring while consumers remain worried about the job market, according to a pair of Bank of Canada surveys that may nudge policy makers toward another interest rate cut next week. <\/p>\n

The central bank\u2019s quarterly Business Outlook Survey, published Monday, found a slight improvement in business sentiment compared to low levels earlier this year. But uncertainty over U.S. tariffs<\/a> continues to weigh on expectations for sales, hiring and investment. <\/p>\n

\u201cBusinesses no longer expect sales growth to strengthen over the coming year as tariff-related impacts continue to hold back demand,\u201d the Bank of Canada said. <\/p>\n

Most companies told the bank they don\u2019t intend to hire new employees over the next year, and many reported scaling back investment plans and focusing on routine maintenance instead of expanding capacity. <\/p>\n

Meanwhile, the bank\u2019s consumer survey found that Canadians were feeling slightly more positive about their financial position but were increasingly worried about their jobs. Public sector workers were particularly concerned given expectations of federal work force downsizing. <\/p>\n<\/p>\n

The downbeat tone of the surveys, conducted in August and September, reinforced market expectations that the Bank of Canada<\/a> will lower interest rates again next week to support the ailing economy. <\/p>\n

The bank cut its policy rate to 2.5 per cent in September, restarting an easing cycle that had been on pause since March. Financial markets now put the odds of another quarter-point cut on Oct. 29 at around 85 per cent, according to LSEG data \u2013 up several points from last week. <\/p>\n

Bank of Canada\u2019s Macklem sees slow growth, soft job market ahead of rate decision<\/a><\/p>\n

The last key piece of data ahead of the rate decision, the September inflation numbers<\/a>, will be published on Tuesday. <\/p>\n

The central bank resumed rate cuts last month after deciding downside risks to economic growth and employment outweighed upside risks to inflation. Gross domestic product contracted in the second quarter and the unemployment rate hit 7.1 per cent, while the bank estimates underlying inflation is running at around 2.5 per cent, only slightly above target. <\/p>\n

Speaking to reporters last week, Bank of Canada Governor Tiff Macklem refused to tip his hand on the upcoming rate decision but said that he expects growth to remain sluggish through the back half of the year. <\/p>\n

\u201cIt\u2019s going to be growth, but it\u2019s going to be soft growth. It\u2019s not going to feel very good, and it\u2019s certainly not going to be enough to close the output gap,\u201d Mr. Macklem said. <\/p>\n<\/p>\n

Two-thirds of consumers and a third of businesses expect an outright recession, according to the surveys. <\/p>\n

The business survey found some pockets of optimism, including among retailers, who have benefitted from relatively robust consumer spending and the Buy Canadian trend. But exporters remained pessimistic. Even though most said they aren\u2019t being directly hit by U.S. tariffs, they see trade uncertainty limiting export growth.<\/p>\n

The bank also conducted \u201cspecial consultations\u201d with steel and aluminum companies that reported \u201cespecially weak outlooks\u201d and \u201csignificant layoffs.\u201d<\/p>\n

Opinion: Can Carney do the hard things needed to save Canada?<\/a><\/p>\n

When it comes to inflation, companies reported dealing with cost pressures from trade disruptions, but many said they\u2019re unable to pass these costs along to customers given weak demand. Business inflation expectations declined compared to the prior quarter. <\/p>\n

Consumer inflation expectations, by contrast, ticked higher. However, the survey was completed before Ottawa removed most retaliatory tariffs on U.S. goods at the start of September \u2013 a move that should reduce inflationary pressures from imported goods. <\/p>\n

\u201cThe timing of the Bank of Canada\u2019s surveys make it difficult to interpret the results,\u201d Royce Mendes, head of macro strategy at Desjardins, said in a note to clients. <\/p>\n

\u201cThat said, with inflation expectations, if anything, lower than what was reported in these surveys and the economy nowhere near full health, we see a strong case for further rate reductions.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: An employee works at Finica Food Specialties’ warehouse in Mississauga, Ont., in July.…\n","protected":false},"author":2,"featured_media":227994,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[901,888,902,879,877,903,45,49,48,876,895,896,891,878,875,46,549,295,894,887,914,880,881,893,889,890,884,904,885,909,910,912,907,911,905,908,882,898,899,714,897,906,865,61,900,892,886,883,913],"class_list":["post-227993","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-alberta","tag-arts-news","tag-bc","tag-breaking-news","tag-breaking-news-video","tag-british-columbia","tag-business","tag-ca","tag-canada","tag-canada-news","tag-canada-sports","tag-canada-sports-news","tag-canada-trafficcanada-weather","tag-canadian-breaking-news","tag-canadian-news","tag-economy","tag-education","tag-environment","tag-federal-government","tag-foreign-news","tag-globe-and-mail","tag-globe-and-mail-breaking-news","tag-globe-and-mail-canada-news","tag-government","tag-life-news","tag-lifestyle","tag-local-news","tag-manitoba","tag-national-news","tag-new-brunswick","tag-newfoundland-and-labrador","tag-northwest-territories","tag-nova-scotia","tag-nunavut","tag-ontario","tag-pei","tag-photos","tag-political-news","tag-political-opinion","tag-politics","tag-politics-news","tag-quebec","tag-sports-news","tag-technology","tag-travel","tag-trudeau","tag-us-news","tag-world-news","tag-yukon"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/227993","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=227993"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/227993\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/227994"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=227993"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=227993"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=227993"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}