Survey shows optimism remains firm despite cost pressures and hiring woes
Canadian businesses are bracing for the months ahead with a mix of caution and resilience, according to a new survey that provides a snapshot of how firms are navigating persistent inflation, rising costs, and tariff uncertainty.
Statistics Canada’s newly released Canadian Survey on Business Conditions for the third quarter of 2025 reveals that cost concerns remain widespread but are easing slightly with around 62% of businesses expecting cost-related obstacles in the next three months, down from 65% in the previous quarter.
However, inflation is still the big concern with 45% naming it as a looming challenge, almost double the share that cited the cost of inputs such as labour, raw materials, and energy. Accommodation and food services, retail, and other service industries were especially likely to flag inflation as their top concern.
More than half of agricultural businesses identified inputs as a major challenge, alongside about four in ten in both manufacturing and accommodation and food services. When forced to pick the single biggest challenge for the next quarter, 13% pointed to inflation, 10% to recruiting skilled workers, and 6% to input costs.
Tariffs are also shaping business decisions and in the past six months a quarter of businesses passed tariff-driven cost increases onto customers, while four in ten absorbed them, although longer term this may shift.
Almost 40% expect they will have to raise prices over the next year, while more than a quarter don’t anticipate tariff-related increases at all. More than one in five companies shifted marketing efforts to highlight Canadian-made products, with retailers leading the way.
Despite the pressures, two thirds of businesses say they are optimistic about the next 12 months, only slightly below last quarter’s level.
More than half believe they could continue operating and maintain staffing for at least a year under current tariff conditions. Short-term sales expectations are mixed: about 14% foresee gains in the next three months, while 19% expect declines.
Only 15% of businesses plan to adopt AI in the next year, while two thirds have no such plans, citing irrelevance, lack of knowledge, or security concerns.
A separate Canadian Federation of Independent Business survey of small businesses in Newfoundland and Labrador ahead of the provincial election, finds that reducing their tax burden on is the top priority for 89%, followed by reducing personal income taxes (71%), red tape (64%) and energy costs (58%).
“Affordability is the number one issue for small business owners in this election,” said Jonathan Galgay, CFIB’s Director of Legislative Affairs for Newfoundland and Labrador. “Just as households are grappling with rising living costs, small businesses are under mounting pressure from higher operating expenses. That’s why we’re calling on all parties to commit to addressing the needs of small businesses and introduce policies that will provide cost relief and improve affordability.”
