Summary：**Bank of Canada’s Q2 2026 Business Outlook Survey Shows Optimistic Growth***Introduction* The Bank

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**Bank of Canada’s Q2 2026 Business Outlook Survey Shows Optimistic Growth**

*Introduction*
The Bank of Canada released its quarterly Business Outlook Survey for Q2 2026, revealing a nuanced picture of Canadian firms’ expectations. While the accompanying Business Leaders’ Pulse flagged a dip in overall sentiment, the survey’s core growth indicators remain buoyant, suggesting that underlying economic momentum is still intact despite headwinds.

*Key Developments*
According to the survey, 62 % of respondents anticipate higher output over the next twelve months, up from 58 % in the previous quarter. This optimism is driven primarily by stronger export prospects, with 48 % of exporters forecasting increased foreign demand, particularly in the energy and agri‑food sectors. Conversely, domestic sales expectations softened: only 41 % of firms predict rising home‑market revenue, down from 46 % last quarter. Respondents cited heightened geopolitical tension—especially trade policy uncertainty with key partners—and rising fuel prices as the main dampeners of domestic demand.

*Industry Analysis*
Sector‑by‑sector breakdown shows manufacturing and resources leading the optimistic camp. Manufacturers pointed to recovering global supply chains and a modest rebound in commodity prices, which they expect to lift capacity utilization. The services sector, however, expressed caution; retail and hospitality firms noted that higher transportation costs are squeezing discretionary spending, tempering their domestic sales outlook. The survey also highlighted a persistent cost‑pressure theme: 55 % of all firms reported that input‑cost inflation,