Canadian Survey on Business Conditions, second quarter 2026

Released: 2026-05-27

Businesses continue to anticipate a variety of obstacles over the next three months (see Note to readers). While pressures of both cost- and labour-related obstacles continued into the second quarter, the proportion of businesses with a positive outlook has remained steady compared with previous quarters.

Real gross domestic product was up 0.2% in February, following a 0.1% growth in January. Meanwhile, consumer inflation rose 2.8% year over year in April, up from an increase of 2.4% in March. Furthermore, in April, overall employment (-18,000; -0.1%) was little changed and the employment rate fell 0.1 percentage points to 60.5%.

In this macroeconomic context, Statistics Canada conducted the Canadian Survey on Business Conditions from April to May 2026. The survey collects information on the environment businesses are currently operating in and their expectations moving forward.

Cost-related obstacles are expected to be more prevalent

In the second quarter, 64.3% of businesses across Canada expect cost-related obstacles over the next three months, up from 58.9% in the first 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; as well as transportation costs. In April, prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, gained 2.6% month over month and rose 31.6% year over year. Additionally, average hourly wages among employees were up 4.5% year over year in April, following a growth of 4.7% in March.

Within this environment, in the second quarter of 2026, nearly half (48.8%) 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 (65.9%), retail trade (60.0%) and manufacturing (58.2%).

In the second quarter, cost of inputs—which includes costs of labour, raw materials and energy—is the second most commonly expected obstacle over the next three months. Nearly 3 in 10 businesses (28.4%) expect this, led by those in agriculture, forestry, fishing and hunting (60.0%), manufacturing (48.1%) and accommodation and food services (43.1%).

Over one-third of businesses expect a negative impact from tariffs imposed by the United States on imports from Canada over the next 12 months

In the second quarter, over one-third (34.0%) of all businesses, whether they engaged in trade or not, expect the imposition of tariffs by the United States on imports from Canada to have a negative impact on their business over the next 12 months. Businesses in manufacturing (54.0%), wholesale trade (47.1%) and agriculture, forestry, fishing and hunting (46.3%) were most likely to indicate this. In contrast, 1.1% of businesses expect that these tariffs will have a positive impact on their business over the next 12 months. Meanwhile, nearly half (47.3%) expect that the imposition of tariffs by the United States on imports from Canada will have no impact on their business over the next 12 months. A further 17.6% of businesses were unsure what impact tariffs imposed by the United States will have on their business.

Over one-quarter of businesses passed cost increases due to tariffs onto customers over the 12 months preceding the survey

In the second quarter, 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 international trade or not. Over one-quarter (28.3%) of businesses reported having done so, while nearly two-fifths (38.4%) had not passed any cost increases onto their customers. Meanwhile, one-third (33.3%) of businesses did not experience any cost increases due to tariffs.

At the same time, just over one-third (33.8%) of businesses reported being either very or somewhat likely to pass cost increases due to tariffs onto their customers over the next 12 months. In contrast, 15.1% were either very or somewhat unlikely to do the same, and 15.8% were unsure. Lastly, over one-third (35.3%) of businesses did not expect to pass any cost increases due to tariffs onto their customers over the next 12 months, as they did not expect any.

Over 1 in 10 businesses experience an increase in sales of Canadian products

In the second quarter, 16.6% of businesses indicated having changed their marketing practices over the 12 months prior to the survey to promote Canadian products. Businesses in retail trade (42.7%), accommodation and food services (29.7%) and manufacturing (29.2%) indicated this the most.

Over the 12 months prior to the survey in the second quarter, 14.2% of businesses experienced an increase in sales of their Canadian products, with businesses in retail trade (35.8%), wholesale trade (22.8%) and accommodation and food services (16.8%) being most likely to see this increase. In contrast, over two-thirds (69.3%) of businesses did not experience an increase in sales of their Canadian products over the 12 months prior to the survey, and a further 16.5% were unsure if they had.

The proportion of businesses that used artificial intelligence to produce goods or deliver services over the 12 months preceding the survey has tripled since the second quarter of 2024

In the second quarter, nearly one-fifth (19.2%) of businesses reported using artificial intelligence (AI) to produce goods or deliver services over the 12 months prior to the survey, up from 12.2% in the second quarter of 2025 and 6.1% in the second quarter of 2024. Among these businesses that used AI over the 12 months prior to the survey in the second quarter of 2026, the top uses of AI were data analytics (36.6%), text analytics (34.5%) and virtual agents or chat bots (28.2%).

When asked for barriers that limit business' use of AI, two-fifths (40.0%) of businesses stated that AI is not relevant to the goods they produce or services they deliver, while 23.0% of businesses said that there are no barriers that limit their use of AI. Additionally, 13.4% cited cybersecurity or privacy concerns, and 10.6% stated the costs of using AI.

Business optimism remains steady compared with previous quarters

In the second quarter, just over two-thirds (66.8%) of businesses are either very or somewhat optimistic about their outlook over the next 12 months. This is similar to the proportions of businesses that reported feeling the same in the first quarter of 2026 (72.3%) and fourth quarter of 2025 (65.8%).

Meanwhile, in the second quarter of 2026, 19.4% of businesses expect their sales of goods or services to increase over the next three months, a slight increase from 17.9% in the first quarter. In the second quarter, 16.3% of businesses expect sales of their goods or services to decrease, while 25.2% 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 (42.0%), retail trade (39.7%) and wholesale trade (39.5%).

Products

The infographic "Business conditions in Canada, second quarter of 2026," part of the series Statistics Canada—Infographics (Catalogue number11-627-M), is now available.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).