The Bank of Canada’s Business Outlook Survey (BOS) was conducted through the month of February, with tariffs and related uncertainty dominating the responses. The BOS indicator fell almost a full point to -2.14 in Q1, reversing the previous quarter’s improvement.
As tariff threats on Canada ramped up, about a third of respondents expect a recession in the coming year. Only 30% of respondents explicitly factored tariffs into their outlooks, with others treating them as risks, and still others believing they were irrelevant. Even though tariffs hadn’t yet been implemented as of the survey period, some firms were already cutting investment plans. The balance of investment intentions fell to its weakest in a year. Even so, the Bank reported many firms going ahead with existing investment projects, especially to maintain capacity or—crucially for the economic outlook—improve productivity.