Bank of Canada survey finds cautious hiring despite stronger business sentiment

Canadian businesses sounded somewhat more optimistic in the third quarter, but most were still cautious about expanding payrolls, according to a Bank of Canada survey released October 19. Companies cited better sales prospects than in the previous quarter, while noting that trade uncertainty and cost pressures remain important considerations.

The Business Outlook Survey drew mainly on interviews conducted from August 6 through September 2, alongside separate monthly business responses. Many interviews occurred before fresh trade tensions emerged in late August. That timing matters because respondents contacted after the talks broke down were more concerned about export sales and investment.

Firms described plans to invest in technology, machinery and other efficiency measures, even as hiring intentions remained soft. Some businesses pointed to shortages in skilled trades or specialized jobs, rather than a general shortage of workers. A majority still reported spare capacity, suggesting companies could meet some additional demand without immediately expanding.

Cost pressures remained another concern. Businesses cited fuel prices, tariffs and previous margin compression as reasons they might increase prices. Some expected to pass a portion of extra costs to customers, while others said competition would limit that option. The Bank cautioned that different stages of the survey showed different levels of confidence as trade conditions changed.

For policymakers, the combination of improved earlier sentiment, cautious hiring and later uncertainty creates a complicated picture. A survey captures expectations rather than final economic results. Its findings will be one input into the central bank’s next interest-rate decision and forecasts, alongside inflation, employment, trade and output data.