The Bank of Canada released on April 20 the results of its Business Outlook Survey for the first quarter of 2026, showing a slight improvement in business sentiment and expectations for sales growth, investment, and hiring. The survey was conducted between February 5 and 25, before the war in the Middle East began, with additional follow-up calls made after the conflict started to assess its economic impact.
This survey provides insight into how Canadian businesses are adapting to recent economic developments. The findings matter because they help policymakers understand trends affecting inflation, employment, and investment decisions at a time when global events like trade tensions and geopolitical conflicts influence domestic conditions.
According to the Bank of Canada’s official website, it strives to maintain price stability and foster economic growth by overseeing monetary policy and financial systems. Governor Tiff Macklem has led the institution since his appointment on June 3, 2020. The bank also manages currency and digital payments while regulating retail payment systems as outlined on its website.
Survey evidence shows that fewer firms than last quarter reported trade tensions impacting their sales outlooks. More businesses noted public spending as a positive factor supporting sales. Investment intentions have strengthened for two consecutive quarters, driven by improving domestic demand; hiring intentions have also recovered from previous lows. Despite these gains, some firms remain cautious due to ongoing uncertainty around tariffs and trade policies.
The report highlights that most exporting firms comply with the Canada-United States-Mexico Agreement (CUSMA), making them exempt from tariffs. While only a small share is diversifying exports beyond U.S. markets due to barriers such as transportation costs or limited need, few raised concerns about CUSMA’s upcoming review directly affecting their near-term plans.
Results from follow-up calls after the outbreak of war in the Middle East indicate that many firms are experiencing or expecting higher input costs linked to rising prices for energy, fertilizer, and freight. Most companies’ outlooks for sales, investment, and employment remain largely unchanged despite these cost pressures.
The Bank’s collaboration with university students through initiatives like the Governor’s Challenge demonstrates its commitment to engaging future leaders in monetary policy simulations according to information available on its website.
Looking ahead, most surveyed businesses expect stable price growth over the next year but anticipate moderate increases in input costs if current conditions persist or worsen due to international events.
