A pair of reports from the Bank of Canada say tariff-related uncertainty continued to put a damper on business and consumer sentiment in the second quarter, but the worst-case trade scenarios previously anticipated seem less likely.
The central bank’s business outlook survey said 28 per cent of firms are now planning for a recession in Canada, down from 32 per cent last quarter but still up from 15 per cent over the previous two quarters.
Sales outlooks remain pessimistic overall due to widespread concerns about the effects of a slowing economy, but the report says recent monthly surveys suggest some improvement in firms’ outlooks, especially among exporters because few have been directly affected by current tariffs.
Meanwhile, the Canadian survey of consumer expectations says spending intentions have weakened further because of persistent tariff threats.
Consumers also continue to see the labour market as soft amid “elevated” fears of job loss.
The reports come ahead of the Bank of Canada’s next interest rate decision and monetary policy report set for July 30.
This report by The Canadian Press was first published July 21, 2025.
