The Bank of Canada’s Q2 Business Outlook Survey is set to provide insight into how Canadian firms responded to recent volatility in energy prices, with West Texas Intermediate (WTI) oil prices averaging just under US$100 per barrel in May, compared to under $70 per barrel recently [1]. RBC economists Nathan Janzen and Abbey Xu highlight that the survey responses were likely collected during this period of elevated oil prices, making it a key gauge of business sentiment amid the energy shock [1].
RBC expects inflation expectations to remain anchored near the Bank of Canada’s 2% target, as underlying inflation pressures have continued to track close to this level [1]. The survey will also be scrutinized for signs of whether inflation pressures have broadened, but longer-term expectations are anticipated to stay stable [1]. Measures of expected future sales, employment, and business investment intentions will be closely watched, especially after showing improvement in Q1 [1].
In addition to the survey, May trade data will be released on Tuesday. RBC forecasts exports to rise by 0.6%, a slowdown from the 1.6% increase seen in April, while imports are expected to edge down by 0.8% [1]. Softer energy price growth in May is likely to temper the energy trade balance, and weaker motor vehicle shipments suggest some moderation in auto trade [1].
CONCLUSION
The Bank of Canada’s Q2 Business Outlook Survey and upcoming trade data will offer a timely snapshot of Canadian business sentiment and trade dynamics following recent energy price volatility. RBC expects inflation expectations to remain stable and anticipates modest changes in trade flows, signaling a broadly steady outlook for the Canadian economy.