Oct 19, 2022
VOT Research Desk
Market Insights, Considerations & Analytics
Later today, Canadian inflation data will be in the spotlight, and more evidence of deflation is anticipated. We don’t have a lot of opportunities to talk on headline inflation these days, although it decreased in August more quickly than was anticipated. When compared to the 7.3% forecast, the CPI “only” increased by 7.0% year over year, and the BOC’s favored indicators of Trimmed and Mean CPI both decreased.
According to today’s forecasts, Trimmed Mean will decrease to 5.1% (from 5.2% previously) and Median will remain same at 4.8%. The BOC also pays extremely close attention to the business outlook survey, which was released earlier this week, as much as we’d want to see the statistics decline.
Despite the fact that pricing pressures are still high and much over the BOC’s target, firms anticipate them to diminish. A decline in growth is anticipated, and 35% of businesses predict a 50-80% possibility of a recession. It is a nasty sort of disinflation, though.
Q3 Business Outlook Survey’s executive summary
The mood among business people is deteriorating.
The majority of firms anticipate a recession (due to rising interest rates and high prices).
Possibly at their pinnacle, workforce and supply chain constraints.
Due to decreasing resource prices and reduced prices for other raw items, businesses anticipate mild pricing rises.
Also anticipated to slow down is wage growth.
Although they have slightly decreased, short-term inflation expectations are still high (and above the BOC target).
The prognosis for sales has weakened.
Higher interest rates are having a negative impact on household spending and housing-related company sales.
Other businesses anticipate stronger, albeit lower-than-pre-pandemic revenues.
