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BoC: Firms’ inflation expectations increased in Q2

In its Business Outlook Survey (BoS) for the second quarter, the Bank of Canada (BoC) said that they saw continued improvement in business sentiment, per Reuters.

Additional takeaways

"BoS Indicator hits highest level on record at 4.17 from 2.95 in Q1."

"Firms tied to high-contact services are becoming more confident that sales will pick up as vaccination rates rise, suggesting an important broadening in recovery ahead."

"Most firms report an improvement in their sales prospects from a year ago."

"Indicators of capacity pressures and labour shortage intensity have increased."

"Plans to invest and hire staff are widespread as firms prepare to meet unexpected sales increases suggests broadening of labour market recovery."

"The number of firms with improved indicators of future sales is at a record high, signalling broad-based strengthening of demand versus a year ago."

"Balance of opinion on future sales growth dips to 47 in Q2 from 52 in Q1."

"Businesses expect wages, input prices and output prices to grow at a faster pace than a year ago."

"Firms’ inflation expectations increased but most drivers of inflationary pressures are viewed as temporary."

"BoC Q2 Survey of Consumer Expectations says expectations for 1-year ahead inflation have increased but consumers expect this increase to be temporary."

Market reaction

This report doesn't seem to be having a significant impact on the CAD's performance against its major rivals. As of writing, the USD/CAD pair was up 0.35% on the day at 1.2361.

 

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