Trade uncertainty taking a toll on business and consumer confidence: Bank of Canada reports
A couple of reports from the Banca del Canada indicated the decline in the feeling of business and consumers in the first quarter while the uncertainty about the US rates took their toll.
The central bank Survey on company prospects On Monday he said 32 % of companies are planning with the assumption that a recession will occur in Canada in the next year, compared to 15 % in the last two quarters.
“The uncertainty relating to the financial, economic and political conditions remains the main concerns for companies and has increased abruptly in this quarter,” says the report.
A lower percentage of the companies expected that the growth of the best sales in the next year to 43 % compared to 53 % in the fourth quarter of 2024, the results showed, while the investments in the machine equipment decreased.
33 % of the companies interviewed said they were expecting that investments in machine equipment will be higher over the next year than 48 % in the previous quarter.
The percentage of companies that should increase its account during the following year also decreased by 32 % compared to 45 % in the fourth quarter of last year.
“In the current economic environment, many companies are delaying important decisions, such as those relating to investments and hiring, until they have a clearer perspective,” says the report.
The Business Outlook survey also said that companies no longer expect the growth of their input prices to slow down.
“Two thirds of companies believe that their costs would have increased if the widespread rates were implemented. Consequently, many companies would increase their sales prices,” says the report.
“Short -term inflation expectations are higher than the last quarter, with companies that believe that the inflationary impacts of the rates will overcome the pressure reduced by the weak demand”.
In the meantime, the Canadian investigation into consumers’ expectations has said that worries about job safety have increased due to the commercial conflict.
“This is particularly true for those who work in sectors that depend strongly on the trade between Canada and the United States,” says the relationship.
The report also states that for the first time since the first half of 2024, there has been an increase in the share of consumers who have claimed to reduce or plan to reduce overall expenses.
The Federal Government has announced that it will lighten some employment insurance rules and will provide $ 6 billion in support of the companies affected by the commercial war of the United States-Canada while the Trump administration is now aimed at the Canadian wood and dairy industries.
The latest investigations were conducted in front of the so -called mutual tariff announcement of President Donald Trump last week who pushed an increase in fears of a global recession and a dip on equity markets all over the world.
The Business Outlook survey was conducted between 6 and 26 February, while the Canadian investigation into consumers’ expectations was conducted between January 29 and February 19, with telephone interviews of follow -up between 20 and 25 February.
The next decision of the interest rate of the Banca del Canada and the report on monetary policy is set for April 16.
The central bank reduced the key interest rate of a quarter of a percentage point to 2.75 percent last month. The summary of the resolutions of this meeting suggested that it may have maintained the stable rate except for the substantial uncertainty on rates in the United States
