Xero data shows a tentative recovery, but trade tensions are hitting exporters hardest and payment times remain stubbornly elevated
Canadian small businesses recorded four consecutive months of sales growth through the September 2026 quarter, offering a cautious sign of recovery after a prolonged period of declining revenues, according to new data from global small business platform Xero.
The quarterly Xero Small Business Insights (XSBI) report based on aggregated and anonymised data from 12,000 Canadian small businesses, found sales rose 2.0 per cent year-over-year in the September quarter - the first time four months of consecutive growth have been recorded since July 2025. Monthly figures showed a 3.0 per cent year-over-year increase in July, 2.5 per cent in August, and 0.5 per cent in September.
"Four months of growth is encouraging, but sales are still well below historical levels, so it's too early to call this a recovery," said Ashalee Mohamed, Country Manager for Canada at Xero. "With ongoing trade tensions with the US and higher-than-normal fuel prices, many small businesses are still facing tough trading conditions."
The results remain well below Xero's historical average of 4.0 per cent year-over-year sales growth.
Alberta leads, B.C. lags
Regional performance diverged sharply. Alberta posted the strongest result at 5.9 per cent year-over-year growth, buoyed by elevated global oil prices, while Ontario grew 2.2 per cent. British Columbia fell 2.6 per cent year-over-year - recording declines in every month of the quarter — and the Maritime Provinces dropped 1.4 per cent.
"Alberta is doing a lot of the heavy lifting, and without it the national picture would probably look a lot worse," said Louise Southall, Economist at Xero.
Exporters feel the pressure
The impact of US trade tensions is sharpest among internationally active businesses. According to the Canadian Federation of Independent Business (CFIB) September Business Barometer, exporters reported a 12-month confidence score of 38.6 points in September 2026, compared with 43.5 for importers and 52.2 for businesses not active internationally. In September 2024, no statistical difference existed between the three groups.
"No one wins from tariffs," said Southall. "Consumers on both sides of the border pay more for the same goods, and exporters find it harder to make a sale against products that don't carry the same tariff."
Late payments persist
Payment times were largely unchanged: Canadian small businesses were paid an average of 10.5 days late in the September quarter, down marginally from 10.8 days in the June quarter. Time-to-be-paid stood at 28.4 days overall, with September reaching 29.8 days. Canada continues to record the longest late payment times of all countries tracked in the XSBI program.
Mohamed advised business owners to review pricing, monitor where costs are rising, and maintain clear visibility into cash flow as economic uncertainty persists through the remainder of 2026.
