Canada Business Outlook Research Brief

Business sentiment improves, but sales outlook stays weak. As of June, the worst-case tariff scenarios first anticipated by businesses looked less likely to appear, leading to a slight recovery in business sentiment in the Bank of Canada’s Business Outlook Survey. Preferential treatment under the USMCA allowed tariff exemptions for the majority of surveyed firms – particularly exporters, who saw a more pronounced improvement in their outlook through June. Yet broader sales indicators weakened notably, reflecting growing concerns about a slowing economy stemming from the impact of tariffs. The Indicator of Future Sales (FSI) fell to a six-quarter low, reinforcing expectations that GDP growth slowed in the second quarter.