Canadian Survey on Business Conditions

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Canadian business sentiment held broadly steady in Q3 2025, with 66.7% of firms optimistic about the next 12 months, though cost pressures, tariffs, and hiring challenges continue to weigh on operations.
- Cost-related obstacles were expected by 62.2% of businesses (vs 65.4% in Q2), with inflation cited by 45.2% and cost of inputs by 25.4%.
- Nearly 40% of businesses expect to pass tariff-driven cost increases to customers over the next 12 months, up from 24.9% that had done so in the past six months.
- Only 13.8% of firms expect sales to rise in the next three months (vs 16.2% in Q2), while 18.9% expect declines and 20.6% anticipate raising prices.
- Just 14.5% of businesses plan to adopt AI in the next 12 months (vs 10.6% in Q3 2024), while 66.7% have no plans, mostly citing irrelevance to their operations.
- Nearly one-fifth (16.0%) of firms saw higher sales of Canadian products in the past six months, led by retail (40.7%), wholesale (33.1%), and accommodation/food services (30.2%).
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Canadian business sentiment declined in Q2 2025, with 70.0% of businesses optimistic about the next 12 months, the lowest since Q1 2024.
- Cost-related obstacles remain elevated, with 65.4% of businesses expecting them, and 49.3% citing inflation as the top concern.
- 27.7% of businesses expect input costs to be a challenge, and of those, 61.9% specifically cited raw material costs (up from 44.3% in Q1).
- 35.0% of businesses expect labour-related obstacles, and nearly half of these (46.4%) expect management to work increased hours.
- 18.1% of businesses expect a high impact from U.S. tariffs on Canadian goods, while 18.5% expect a high impact from Canadian counter-tariffs on U.S. goods.
- Only 16.2% expect sales to rise in the next 3 months, down from 16.7% in Q1, and 26.5% plan to raise prices.
- High operational costs were the top growth impediment (26.0%), and 20.0% of businesses are focused on reducing them over the next year.
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Nearly three-quarters (73.1%) of businesses are either very optimistic or somewhat optimistic about their future outlook over the next 12 months.
- The proportion of businesses reporting an optimistic future outlook has consistently remained above 70% since the second quarter of 2024.
- Meanwhile, 16.7% of businesses expect their sales of goods and services to increase over the next three months, consistent with 16.6% in the fourth quarter of 2024.
- This was led by businesses in retail trade (24.4%); manufacturing (23.4%); and arts, entertainment and recreation (19.8%).
- At the same time, 24.8% of businesses expect to raise the prices of their offered goods and services over the next three months.
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