Businesses continue to anticipate a variety of obstacles over the next three months. While pressures of both cost- and labour-related obstacles continued into the fourth quarter of 2025, the proportion of businesses with a positive outlook remained comparable with previous quarters, said Statistics Canada in a recent report.
Real gross domestic product contracted 0.3% in August, offsetting most of July’s 0.3% expansion, and consumer inflation rose 2.2% on a year-over-year basis in October, down from a 2.4% increase in September. Meanwhile, overall employment increased by 67,000 (+0.3%) and the unemployment rate declined 0.2 percentage points to 6.9% in October, explained the federal agency.
“In the fourth quarter, 61.2% of businesses across Canada expect cost-related obstacles over the next three months, similar to 62.2% in the third quarter. For the Canadian Survey on Business Conditions, cost-related obstacles consist of inflation; cost of inputs; interest rates and debt costs; cost of insurance; cost of real estate, leasing or property taxes; and transportation costs. In October, prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, increased 1.6% month over month and grew 5.8% year over year. Additionally, average hourly wages among employees increased 3.5% on a year-over-year basis in October, following growth of 3.3% in September,” it noted.
“Within this environment, over two-fifths (41.1%) of businesses expect inflation to be an obstacle over the next three months. Businesses expecting inflation to be an obstacle were primarily in accommodation and food services (60.2%), transportation and warehousing (49.3%) and retail trade (45.8%).
“Recruiting skilled employees is the second most expected obstacle, anticipated by over one-quarter (26.4%) of businesses. It is most commonly expected by businesses in retail trade (35.4%), accommodation and food services (34.8%), and construction (33.2%).”
When asked to identify the most challenging expected obstacle over the next three months, 10.4% of businesses expected it to be inflation, 10.4% indicated recruiting skilled employees and 7.0% reported the cost of inputs, explained the report.
The Bank of Canada lowered its overnight lending rate to 2.25% in October 2025, down from 3.75% in October 2024. Nearly one-quarter (22.9%) of businesses indicated in the fourth quarter of 2025 that they expect interest rates and debt costs to be an obstacle over the next three months, down slightly from 24.8% in the third quarter of 2025 and 26.4% in the second quarter of 2025. When asked about the impact of interest rates on the business over the 12 months prior to the survey, 37.5% of businesses reported a medium or high impact, while 48.5% reported a low or no impact. The level of impact reported by businesses has shifted from the fourth quarter of 2024, when 48.1% of businesses reported a medium or high impact, and 39.1% reported a low or no impact, it said.
“In the fourth quarter of 2025, nearly two-fifths (39.9%) of businesses reported that they were either very likely or somewhat likely to pass cost increases due to tariffs onto their customers over the next 12 months. Meanwhile, 13.6% were either very unlikely or somewhat unlikely to do the same, and 15.2% were unsure. Nearly one-third (31.4%) businesses did not expect any cost increases due to tariffs over the next 12 months,” added Statistics Canada.
“In the fourth quarter of 2025, one-fifth (20.0%) of businesses indicated they had changed their marketing practices over the previous six months to promote Canadian products, led by those in retail trade (50.5%), accommodation and food services (33.1%) and manufacturing (27.4%).
Over the previous six months, 13.3% of businesses experienced an increase in sales of their Canadian products, with businesses in retail trade (30.3%), manufacturing (22.2%) and wholesale trade (22.1%) being most likely to see an increase in sales. Comparatively, over two-thirds (68.2%) of businesses did not experience an increase in sales of their Canadian products over the previous six months, and a further 18.5% were unsure.”
In the fourth quarter of 2025, nearly two-thirds (66.3%) of businesses are very or somewhat optimistic about their outlook over the next 12 months, similar to the levels reported in the second (70.0%) and third (66.7%) quarters of 2025, it said. Meanwhile, 16.3% of businesses expect their sales of goods or services to increase over the next three months, a slight increase from 13.8% in the third quarter of 2025. At the same time, 20.8% of businesses expect sales of their goods or services to decrease while 21.8% of businesses anticipate the selling price of their goods or services to increase. Businesses most likely to expect their selling prices to increase over the next three months are those in accommodation and food services (35.6%), manufacturing (32.6%) and wholesale trade (30.4%).
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