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 first quarter of 2026, the proportion of businesses with a positive outlook has increased compared with previous quarters, according to a report released by Statistics Canada on Friday.
Real gross domestic product was essentially unchanged in November 2025, following a 0.3% decline in October. Meanwhile, consumer inflation rose 2.3% on a year-over-year basis in January 2026, following a 2.4% increase in December 2025. Furthermore, in January 2026, overall employment edged down (-25,000; -0.1%) and the employment rate decreased 0.1 percentage points to 60.8%, said the federal agency.
In the first quarter of 2026, 59.2% of businesses across Canada expect cost-related obstacles over the next three months, down from 61.2% in the fourth quarter of 2025. 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 January 2026, prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, increased by 7.7% month over month and rose 8.0% year over year. Additionally, average hourly wages among employees were up 3.3% on a year-over-year basis in January, following growth of 3.4% in December 2025, explained Statistics Canada.
“Within this environment, in the first quarter of 2026, just over two-fifths (40.8%) of businesses expect inflation to be an obstacle over the next three months, marking it as the most commonly expected obstacle among businesses. Businesses expecting inflation to be an obstacle were most frequently found in accommodation and food services (60.7%); agriculture, forestry, fishing and hunting (50.1%); and wholesale trade (48.2%),” it said.
“Recruiting skilled employees is the second most commonly expected obstacle, anticipated by one-quarter (25.3%) of businesses, led by those in administrative and support, waste management and remediation services (39.0%); construction (37.5%); and accommodation and food services (34.2%).
“When asked to identify the most challenging expected obstacle over the next three months, 10.7% of businesses expected it to be recruiting skilled employees, 10.5% indicated inflation and 6.8% reported the cost of inputs.”
Nearly one-third (32.0%) of all businesses, whether they engaged in trade or not, reported that the imposition of tariffs by the United States on imports from Canada had a negative impact on their business over the 12 months prior to the survey. Businesses in manufacturing (51.2%); agriculture, forestry, fishing and hunting (47.1%); and wholesale trade (45.7%) were most likely to indicate this. In contrast, 1.4% of businesses reported that these tariffs had a positive impact on their business over the 12 months prior to the survey. Meanwhile, over half (51.2%) indicated that the imposition of tariffs by the United States on imports from Canada had no impact on their business over the 12 months prior to the survey. A further 15.4% of businesses were unsure what impact tariffs imposed by the United States had on their business, noted Statistics Canada.
“In the first quarter of 2026, all businesses were asked whether they had passed cost increases due to tariffs onto their customers over the 12 months prior to the survey, whether they engaged in trade or not. Over one-quarter (26.8%) of businesses reported having done so, while over one-third (34.5%) had not passed any cost increases onto their customers. Meanwhile, nearly two-fifths (38.6%) of businesses had not experienced any cost increases due to tariffs,” it said.
“At the same time, over one-third (34.1%) 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. In contrast, 14.4% were either very unlikely or somewhat unlikely to do the same, and 15.0% were unsure. Over one-third (36.5%) of businesses did not expect any cost increases due to tariffs over the next 12 months.”
In the first quarter of 2026, 16.1% of businesses indicated they had changed their marketing practices over the 12 months prior to the survey to promote Canadian products, led by those in retail trade (41.3%), accommodation and food services (30.2%) and wholesale trade (28.1%), according to the report.
“Over the 12 months prior to the survey, 12.7% of businesses experienced an increase in sales of their Canadian products, with businesses in retail trade (27.2%), manufacturing (23.0%) and wholesale trade (21.7%) being most likely to see an increase in sales. In contrast, 7 in 10 (70.5%) businesses did not experience an increase in sales of their Canadian products over the 12 months prior to the survey, and a further 16.9% were unsure,” it said.
“In the first quarter of 2026, nearly three-quarters (73.1%) of businesses are either very or somewhat optimistic about their outlook over the next 12 months, higher than the proportions of businesses that reported the same in the third (66.7%) and fourth (66.3%) quarters of 2025,” concluded Statistics Canada.
“Meanwhile, in the first quarter of 2026, nearly one-fifth (18.1%) of businesses expect their sales of goods or services to increase over the next three months, a slight increase from 16.3% in the fourth quarter of 2025. In the first quarter of 2026, 14.8% of businesses expect sales of their goods or services to decrease, while 23.2% 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 (35.1%), retail trade (29.7%) and manufacturing (29.5%).”
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