CANADA DATA
- The share expecting larger-than-normal price increases over the next twelve months increased from 17% to 21% in Q2 (vs the 27% average response to the same question in 2023).
- BoC commentary paints this in a positive light; it’s “well below” last year’s average and “considerably lower” than the 34% realized over the past year. However, the BoC make it very hard to know how this compares historically. Last quarter’s survey had a different question which showed 13% expecting output prices to increase significantly vs a pre-pandemic average of 11%.
- The increase in the share expecting larger than usual increases was at least partly offset by “more firms expect[ing] to keep prices flat”, whilst the share expecting more-frequent-than-normal price increases only marginally increased from 10% to 11% (averaged 15% in 2023).
- Inflation expectations generally flat over the quarter, with the 2Y unchanged at 3.0%. Monthly readings from the Business Leaders’ Pulse paint a similar picture.
- Fewer firms expect inflation of 2-3% over the next two years (from 54% to 48%). That more than offsets the 1pp increase for the share expecting inflation of >3% (from 40% to 41%) but a large increase in the no response share muddies the takeaway here.
Weak investment outlook:
- Investment intentions saw a tepid lift with a net 11% in Q2 expecting to increase investment spending on machinery & equipment over the next year after the 0% in Q1 was the lowest since 2Q20. It’s still below the 16% averaged since 2017.
Source: Bank of Canada
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