Canadian businesses grew more upbeat over the summer while households stayed cautious, according to two quarterly surveys the Bank of Canada published on Monday, October 19, 2026: the Business Outlook Survey and the Canadian Survey of Consumer Expectations, both for the third quarter.
- Firms planning or budgeting for a recession in the next 12 months: 6%, down from 17%.
- Roughly half of firms plan to pass on some or all cost increases tied to the war in the Middle East and tariffs.
- Consumer spending intentions edged down and remain below the survey average.
- Consumers' interest rate expectations were roughly unchanged.
What the surveys found
The Business Outlook Survey interviews ran from August 6 to September 2, 2026. The Bank said overall business sentiment improved after deteriorating in the previous quarter, and that indicators of future sales are above their historical average. The share of firms planning or budgeting for a recession fell to 6%, the lowest since the question was introduced in 2023. Hiring intentions remain soft and below average.
The Bank cautioned that about three-quarters of interviews took place before Canada–U.S. trade talks broke down on August 21, and that responses collected after that showed weaker sentiment. It also said new tariffs and counter-tariffs are putting upward pressure on costs, prices and inflation expectations, and that firms' expectations for input and selling price growth moderated but remain elevated.
The consumer survey ran online from August 5 to 27, 2026. Spending intentions edged down, with high prices the top barrier, and concerns about job loss rose modestly. The Bank noted that improvements in households' financial health were measured before the surge in bond yields in September 2026.
Why it matters for borrowers
Our interpretation: the surveys feed into the Bank of Canada's next interest rate announcement on October 28, 2026. Firms passing on higher costs points toward price pressure; weak hiring and cautious households point the other way. Neither survey predicts the decision. Fixed mortgage rates follow bond yields more closely than the policy rate, so the September rise in yields that the Bank mentions matters for anyone shopping for a fixed rate.
What to do next
- If you have a pre-approval, check when its rate hold expires.
- Test your budget at a higher rate with the stress test calculator.
- Compare fixed and variable costs using the fixed vs variable calculator, then confirm current offers with a lender or broker.
Sources
- Bank of Canada, Business Outlook Survey—Third Quarter of 2026, 2026-10-19. Accessed 2026-10-21.
- Bank of Canada, Canadian Survey of Consumer Expectations—Third Quarter of 2026, 2026-10-19. Accessed 2026-10-21.
- Bank of Canada, Policy interest rate. Accessed 2026-10-21.
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