Most of Canada’s Businesses and Households See a Recession Coming: BoC Survey

Canadian businesses and households don’t see a bright future for the economy in the upcoming months. The Bank of Canada (BoC) released its Business Outlook Survey (BOS) for Q3 2022, and showed a massive erosion of the index. The index has only seen such a substantial decline immediately before a recession. BMO warned investors that data from the BoC shows most households and businesses now expect a recession. 

Canada’s Business Sentiment Flags A Recession

The BOS index plunged sharply, at a speed that typically precedes recession — big ones, too. The indicator dropped 3.18 points to just 1.68% in Q3 2022, the third largest drop on record. Benjamin Reitzes, BMO’s rate and macro strategist, warned the only larger drops occurred before the pandemic, and Global Financial Crisis. This isn’t a run of the mill deterioration in business sentiment, it’s a sharp decline. 

Most Businesses and Households Now See A Recession

Canadian businesses and households aren’t very optimistic about the future, but it may help lower inflation. “The survey also showed a majority of businesses and households see 50% or greater odds of a recession in the next year,” said Reitez. 

Adding, “that would take care of the BoC’s excess demand problem and inflation would likely follow it lower.” 

Expect A Hawkish Central Bank

Despite the expected cooling, most businesses don’t see inflation cooling anytime soon, and that might lead to higher rates. “The BoC’s consumer survey showed heightened inflation worries, which is making policymakers uncomfortable. The latter is a key reason to expect hawkish rhetoric to persist,” he said. 

Managing inflation expectations are important to controlling inflation. When businesses and households expect higher growth, they tend to more easily absorb it, and consume more immediately. However, with news of an upcoming recession, spending is likely to taper, slowing demand and price growth. 



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  • Scott 2 years ago

    Guess we’re going to start paying for all that stuff we bought…

  • Northwest 2 years ago

    Can’t see it ,way too much variables come into play ,maybe a soft down turn in some sectors but not a recession.

  • Chris 2 years ago

    Recession is possible, maybe even likely, but bear with me here. There is more work to do than there are people to do it, in countless sectors. What we’re probably seeing is a pivot back towards more traditional jobs now that tech and day trading are taking a breather. Public sector is basically broken right now and there will be opportunities as they figure out what is needed to serve a modern population. I’m working many jobs right now, not because I have to, but because there is such a shortage of labour that rates are skyrocketing and I’d be stupid not to make hay while the sun is shining. It will take time and a further unwinding of the housing market but people will eventually get back to realizing that the world doesn’t owe them a living. I see a little rough patch ahead while this is happening but overall I’m more excited about the future than I’ve been in years.

  • M.Bury 2 years ago

    They’ve been “seeing” this recession since February. Broken clock is right…

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