Canadian Business Confidence Reached Record Levels In Third Quarter

Canadian business sentiment rose to record levels in the third quarter despite inflation concerns remaining elevated, according to the latest Bank of Canada survey.

An easing of COVID-19 restrictions has driven a sharp improvement in business confidence, with executives in the quarterly survey citing a strong outlook for domestic and foreign sales. The gauge of business sentiment reached its highest level on record going back to 2003.

Despite the strong confidence, businesses say a lack of available workers and supply chain bottlenecks are hurting their ability to meet demand. That’s driving inflation concerns higher: 45% of firms anticipate that inflation will be above 3% over the next two years.

The report adds to evidence that firms are facing challenges meeting robust demand in the aftermath of pandemic lockdowns. More than half of Canadian companies said capital expenditures over the next two to three years will be higher than before the pandemic.

Bonds initially rose on the report, then dropped. The 10-year benchmark traded at 1.609%, about two basis points higher than its previous close.