BoC Q4 Business Outlook Survey: Business sentiment is subdued but remains above its survey low from Q2 2025

• Firms reported that sales growth has been weak over the past year, largely due to the economic effects of trade tensions. They expect sales growth to improve slightly going forward.
• Export sales growth is expected to be modest. A small but increasing share of businesses reported higher sales to non-US markets in response to trade tensions with the US.
• Most firms did not report binding capacity constraints or labour shortages. With demand expected to remain soft, the majority of businesses plan to maintain or decrease current staffing levels.
• Investment intentions improved slightly, but firms are prioritising spending on routine maintenance, partly because of continued trade-related uncertainty. In the oil sector, investment is expected to decline in 2026 because of low oil prices.
• Businesses reported fewer pressures than last quarter from tariff-related cost increases, though these pressures remain prevalent. Most firms do not anticipate substantial increases in selling prices.
• Firms’ inflation expectations remain roughly stable between 2.5-3%.

The BoC's Q4 Business Outlook Survey indicates that while business sentiment is subdued, it remains above its recent lows, which suggests some resilience. However, weak sales growth linked to trade tensions highlights cautious business attitudes, potentially placing downward pressure on investment and staffing, which could influence future monetary policy and economic forecasts.