Beginning in the second quarter of 2026, Bank staff will publish two new summary indicators based on questions from the Business Outlook Survey (BOS):

  • an activity indicator, summarizing firms’ outlooks for sales, investment and hiring
  • a price indicator, summarizing outlooks for input prices, selling prices, wages and inflation

These indicators will be published quarterly on the BOS data page when the Business Outlook Survey report is released.1

Why we are introducing new indicators

Since 2011, the original BOS indicator has summarized the common movement across core questions in the survey.2 It combines firms' responses to three types of questions:

  • demand and economic activity
  • prices
  • capacity pressures

In most quarters, these three types of questions move in the same direction, and the BOS indicator provides a clear signal on the strength of business conditions. The indicator has had meaningful positive relationships with the output gap and with growth in both real gross domestic product (GDP) and business investment.

In recent years, however, activity and price questions have at times moved in opposite directions—a situation that has become more common during recent supply-side shocks. A single summary measure cannot communicate both signals at the same time. Using separate indicators for activity and prices makes these episodes easier to interpret, and the relative movement between the two sheds light on the nature of economic shocks.

The new indicators

The original BOS indicator is a summary indicator constructed using principal component analysis. It includes questions on:

  • demand
    • sales volumes, declines over the past 12 months
    • sales growth, change over the next 12 months
    • indicators of future sales, change compared with 12 months ago
    • investment spending, change over the next 12 months
    • number of employees, change over the next 12 months
  • prices
    • input price growth, change over the next 12 months
    • selling price growth, change over the next 12 months
    • credit conditions, change over the past 3 months
  • capacity
    • ability to meet demand
    • labour shortages
    • intensity of labour shortages, change compared with 12 months ago

The activity indicator, meanwhile, is an equal-weight average of four standardized survey questions covering firms’ outlooks on business activity:

  • sales volumes, magnitude of change over the next 12 months
  • indicators of future sales, change compared with 12 months ago
  • investment spending, magnitude of change over the next 12 months
  • number of employees, magnitude of change over the next 12 months

The price indicator is an equal-weight average of four standardized survey questions covering the price and cost sides of firms’ outlooks:

  • input prices, magnitude of change over the next 12 months
  • selling prices, magnitude of change over the next 12 months
  • wages, change over the next 12 months
  • expected inflation, average annual change over the next 24 months

Before they are averaged, the results of each question are standardized so that no single question dominates the indicator. The original BOS indicator uses principal component analysis to determine how much weight each question receives. In contrast, the new indicators use a simple average, which is easier to communicate and more stable over time.

The new indicators also draw on survey questions asking firms about the expected magnitude of change in sales volumes and prices, rather than changes in the rate of growth that were used for some variables in the original BOS indicator.3 This aligns the new indicators more closely with the concepts of year-over-year growth in GDP and the consumer price index. Because these questions on magnitude-of-change were introduced between 2016 and 2017, the price indicator begins in the first quarter of 2016 and the activity indicator begins in the first quarter of 2017.

Questions on credit conditions and capacity pressures—namely, labour shortages and firms’ ability to meet an unexpected increase in demand—are not included in either new indicator. Responses to these questions can be linked to both business activity and cost pressures at the same time, so including them would blur the distinction being made. They will continue to be published as stand-alone series on the BOS data page.

How the new indicators have behaved

Chart 1 plots the new activity and price indicators alongside the original BOS indicator. In most quarters, all three move together and tell a similar story. The value of having separate indicators is clearest in the shaded periods, when activity and price outlooks diverged.

  • 2022: Supply chain disruptions and labour shortages during the COVID-19 pandemic pushed firms’ expectations for input prices, selling prices, wages and inflation to record highs, even as their outlooks for activity had started to soften. The price indicator therefore captured the buildup and peak of inflationary pressures more clearly than the original BOS indicator did.
  • 2025: Shifting US trade policy and related uncertainty weakened firms’ outlooks for sales, investment and hiring while at the same time pushing up their cost expectations, preventing the price indicator from falling alongside demand. The original BOS indicator declined only slightly, masking the two offsetting signals.
  • 2026: Higher fuel prices due to the war in the Middle East raised firms’ expectations for input prices, selling prices and inflation but slightly reduced activity outlooks for firms outside the Prairies. The price indicator rose sharply, while the activity indicator weakened slightly and the original BOS indicator stayed flat.

In each case, the two new indicators allow for more meaningful interpretations of the nature of the shock than a single summary measure could.

Chart 1: Separate indicators for activity and prices can provide clearer signals during economic shocks than the BOS indicator

How the new indicators relate to GDP and inflation

Because the activity indicator focuses on sales, investment and hiring, it maps naturally onto real GDP growth (Chart 2). Similarly, because the price indicator focuses on wages, costs, selling prices and inflation, it maps naturally onto consumer price index (CPI) inflation (Chart 3). Both indicators tend to lead their respective macroeconomic series, reflecting the forward-looking nature of the underlying survey questions.

Chart 2: The activity indicator tracks GDP more closely than the BOS indicator

Chart 3: The price indicator tracks CPI inflation more closely than the BOS indicator

Compared with the original BOS indicator, the new activity indicator has a stronger relationship with real GDP growth, and the new price indicator has a stronger relationship with CPI inflation (Table 1 and Table 2). These improvements also hold up in out-of-sample forecasting tests.4

Table 1: Indicator’s correlation with real GDP growth at various horizons

Table 1: Correlations between the BOS activity indicator and real GDP growth at various horizons*
t + 4 t + 3 t + 2 t + 1 t t - 1 t - 2 t - 3 t - 4
Original BOS indicator -0.09 0.14 0.36 0.51 0.66 0.42 0.19 -0.03 -0.22
New activity indicator -0.17 0.17 0.45 0.59 0.77 0.40 0.10 -0.14 -0.30

* For example, a strong correlation at t + 1 would suggest that the indicator leads GDP growth by one quarter, meaning it is informative for GDP growth one quarter ahead. The strongest correlation is in bold.
Note: GDP is gross domestic product, and BOS is Business Outlook Survey.

Table 2: Indicator’s correlation with CPI inflation at various horizons

Table 2: Correlations between the BOS price indicator and CPI inflation at various horizons*
t + 4 t + 3 t + 2 t + 1 t t - 1 t - 2 t - 3 t - 4
Original BOS indicator 0.50 0.62 0.66 0.61 0.47 0.19 -0.10 -0.34 -0.51
New price indicator 0.47 0.70 0.85 0.90 0.86 0.66 0.50 0.33 0.16

* For example, a strong correlation at t + 1 would suggest that the indicator leads inflation by one quarter, meaning it is informative for inflation one quarter ahead. The strongest correlation is in bold.
Note: CPI is consumer price index, and BOS is Business Outlook Survey.

Appendix

Table A-1: Questions, response options and units

Table A-1: Questions, response options and units
Question name Question text Response options Units
Sales volumes, declines over the past 12 months Compared with 12 to 24 months ago, did your firm’s sales volumes decline over the past 12 months?*
  • yes
  • no
 Share of firms expecting a decline
Sales growth, change over the next 12 months Compared with the past 12 months, do you expect your firm’s sales volumes over the next 12 months to increase at a greater rate, a lesser rate or the same rate?
  • increase at a lesser rate
  • increase at the same rate
  • increase at a greater rate
  • not applicable/not sure
 Balance of opinion
Sales volumes, magnitude of change over the next 12 months† Compared with the past 12 months, do you expect your firm’s sales volumes over the next 12 months to increase, decrease or remain the same?
  • decreased significantly
  • decreased slightly
  • remain the same
  • increase slightly
  • increase significantly
  • not applicable
 Double-weighted balance of opinion
Indicators of future sales, change compared with 12 months ago Compared with 12 months ago, have your firm’s very recent indicators of future sales (order books, advanced bookings, sales inquiries, etc.) deteriorated, improved or remained the same?
  • deteriorated
  • remained the same
  • improved
  • not applicable/not sure
 Balance of opinion
Ability to meet demand How would you rate your firm's current ability to meet an unexpected increase in demand or sales?
  • no difficulties, operating below capacity
  • some difficulties, at or near full capacity
  • significant difficulties, operating beyond capacity
  • not applicable/not sure
 Share of firms reporting some or significant difficulty
Investment spending, change over the next 12 months Compared with the past 12 months, do you expect your firm’s investment spending on machinery and equipment over the next 12 months to be higher, lower or the about same?
  • lower
  • about the same
  • higher
  • not applicable
 Balance of opinion
Investment spending, magnitude of change over the next 12 months† Compared with the past 12 months, do you expect your firm’s investment spending on machinery and equipment over the next 12 months to be higher, lower or the about same?
  • significantly lower
  • somewhat lower
  • about the same
  • somewhat higher
  • significantly higher
  • not applicable
 Double-weighted balance of opinion
Number of employees, change over the next 12 months Compared with today, do you expect your firm’s number of employees over the next 12 months to be higher, lower or about the same?
  • lower
  • about the same
  • higher
  • not applicable
 Balance of opinion
Number of employees, magnitude of change over the next 12 months† Compared with today, do you expect your firm’s number of employees over the next 12 months to be higher, lower or about the same?
  • significantly lower
  • somewhat lower
  • about the same
  • somewhat higher
  • significantly higher
  • not applicable
 Double-weighted balance of opinion
Wages, change over the next 12 months What do you expect your average wage increase to be next year? Enter point estimate Average point estimate
Labour shortages Does your firm face shortages of labour that restrict your ability to meet demand?
  • yes
  • no
  • not applicable
 Share saying yes
Intensity of labour shortages, change compared with 12 months ago Compared with 12 months ago, are labour shortages generally more intense, less intense or about the same intensity?
  • less intense
  • about the same intensity
  • more intense
 Balance of opinion
Input price growth, change over the next 12 months Compared with the past 12 months, do you expect the prices of products and services that your firm purchases over the next 12 months to increase at a greater rate, a lesser rate or the same rate?
  • increase at a lesser rate
  • increase at the same rate
  • increase at a greater rate
  • not applicable
 Balance of opinion
Input prices, magnitude of change over the next 12 months† Compared with the past 12 months, do you expect the prices of products and services that your firm purchases over the next 12 months to increase, decrease or remain the same?
  • decrease significantly
  • decrease slightly
  • remain the same
  • increase slightly
  • increase significantly
  • not applicable
 Double-weighted balance of opinion
Selling price growth, change over the next 12 months Compared with the past 12 months, do you expect the prices of products and services that your firm sells over the next 12 months to increase at a greater rate, a lesser rate or the same rate?
  • increase at a lesser rate
  • increase at the same rate
  • increase at a greater rate
  • not applicable
 Balance of opinion
Selling prices, magnitude of change over the next 12 months† Compared with the past 12 months, do you expect the prices of products and services that your firm sells over the next 12 months to increase, decrease or remain the same?
  • decrease significantly
  • decrease slightly
  • remain the same
  • increase slightly
  • increase significantly
  • not applicable
 Double-weighted balance of opinion
Expected inflation, average annual change over the next 24 months Over the next 24 months, what do you expect the annual rate of inflation to be based on the consumer price index in Canada? Enter point estimate‡ Average point estimate
Credit conditions, change over the past 3 months How have the terms and conditions for obtaining financing changed over the past three months compared with three to six months ago?
  • eased
  • not changed
  • tightened
  • not applicable
 Balance of opinion

* In the first quarter of 2016, the Bank of Canada added a question about the magnitude of the change in firms’ past sales volumes. For more details, see Bank of Canada, “Backgrounder on removing the past sales growth question from the Business Outlook Survey” (May 2023).
† The magnitude of change questions about sales volumes and input and selling prices were added in the first quarter of 2016; about investment spending in the second quarter of 2016; and about number of employees in the first quarter of 2017. The activity indicator therefore begins in the first quarter of 2017, when the question on number of employees was added.
‡ For the inflation expectations index, respondents are asked to provide a point estimate. If unsure, they can select from predetermined ranges: below 0%; above 8%; or one of eight 1-percentage-point intervals between 0% and 8% (e.g., 2%–3%). When no point estimate is provided, the midpoint of a selected closed interval is used as a proxy. For open-ended selections, the assigned point estimate is based on the distribution of point estimates reported by other respondents in the same range.

  1. 1. The original BOS indicator will also continue to be updated and published quarterly.[←]
  2. 2. For more on the BOS indicator, see Bank of Canada, “Extracting Information from the Business Outlook Survey: A Principal-Component Approach” (November 2011).[←]
  3. 3. For more information on questions about the magnitude of change, see Bank of Canada, “Backgrounder on the Business Outlook Survey questions on the magnitude of change in sales, investment, employment and prices” (July 2026).[←]
  4. 4. For the full results and more detail on the new indicators, see K. MacLean and S. Miller, “New BOS activity and price summary indicators,” Bank of Canada Staff Analytical Paper (forthcoming).[←]
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