Business Expectations Index signals budding optimism as interest rates fall, but labour disputes could spoil the party.

[OTTAWA] — [June 12, 2024] — The Canadian Chamber of Commerce Business Data Lab (BDL) has just released its Q2 Canadian Survey on Business Conditions Report, which shows budding green shoots of business optimism, after the Bank of Canada’s first interest rate cut last week.

The BDL’s Business Expectations Index moved into positive territory for the first time in the past year, hitting 101.8 in the second quarter of 2024, driven by a brighter outlook for sales. Businesses are also looking to hire in the coming quarter, as the labour market comes into better balance between supply and demand.

We’re encouraged by what businesses are signaling. We’re seeing improved sentiment across most sectors, a better outlook for sales, and firms are still looking to hire workers. In a challenging economic context, this is good news from Canadian businesses. Unfortunately, several labour disputes could flare up this summer — potentially causing major disruptions across the country for rail transportation, ports and the border. It’s no surprise then, that impacted firms see supply chain obstacles worsening in the near term.

Stephen Tapp, Chief Economist at the Canadian Chamber of Commerce

While the report highlights that business obstacles are generally improving in an environment of below-trend growth, widespread cost-related pressures remain

Despite the slowdown in headline inflation, the share of companies expecting to raise prices remains elevated,” says Tapp. “This is something the Bank of Canada will be watching closely. If these cost pressures are sustained — especially for wages — this could delay future interest rate cuts.

This quarter’s report also highlighted that business sentiment is strongest in Atlantic Canada (107.6, with Halifax leading the country) and Quebec (105.0), and weakest across Saskatchewan (93.2), Manitoba (98.1) and Ontario (99.1, with Toronto continuing to struggle). A majority of sectors (11 of 16 sectors) have an improving outlook, with finance and insurance (110.9) leading the pack, followed by construction (106.9), while agriculture (96.0), information and culture (98.1), and transportation (98.7) are contracting.  Additionally, the struggles for micro firms (1 to 4 employees) may finally be stabilizing (99.6), while medium- and large-sized firms (100 or more employees) continue to be much more optimistic (106.8).

About the Canadian Chamber of Commerce — The Future of Business Success 

The Canadian Chamber of Commerce is Canada’s largest and most activated business network — representing over 400 chambers of commerce and boards of trade and more than 200,000 business of all sizes, from all sectors of the economy and from every part of the country — to create the conditions for our collective success. The Canadian Chamber of Commerce is the undisputed champion and catalyst for the future of business success. From working with government on economy-friendly policy to providing services that inform commerce and enable trade, we give each of our members more of what they need to succeed: insight into markets, competitors and trends, influence over the decisions and policies that drive business success and impact on business and economic performance.   

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Contact 
Karl Oczkowski 
Senior Director, Corporate Communications and PR 
613.238.4000 (2231) 
koczkowski@chamber.ca