The Bank of Canada's Business Outlook Survey: An Assessment

Since the autumn of 1997, the Bank of Canada's regional offices (located in Halifax, Montréal, Toronto, Calgary, and Vancouver) have conducted consultations with businesses across Canada on a quarterly basis. These consultations are now referred to as the Business Outlook Survey (BOS). The BOS provides a timely source of information on what businesses are experiencing and planning. Business consultations are timed to feed into the decision-making process that precedes the Bank's fixed dates for announcing monetary policy decisions. The consultations are structured around a questionnaire. Every quarter, 100 firms that reflect the diverse composition of the Canadian economy in terms of region, type of business activity, and firm size are interviewed. Because the BOS is a relatively new tool, the survey time series is short. The assessment presented in this paper, which is based on charts and correlations, is intended as an initial guide. The findings suggest that the survey serves as a barometer of the Canadian economy and provides leading signals of future activity. The interview responses also inform the Bank about production-capacity constraints, labour shortages, and inflation expectations.