Businesses continue to anticipate a variety of obstacles over the next three months. While pressures of both cost- and labour-related obstacles have continued into the third quarter of 2025, the proportion of businesses with a positive outlook has remained comparable with previous quarters, according to a report released Wednesday by Statistics Canada.
The federal agency said Real gross domestic product edged down (-0.1%) in May 2025 for a second consecutive month, and consumer inflation rose 1.7% on a year-over-year basis in July 2025, down from a 1.9% increase in June 2025. Meanwhile, overall employment fell by 41,000 (-0.2%) in July 2025 and unemployment was unchanged, at 6.9%.
Cost-related obstacles ease
“In the third quarter of 2025, 62.2% of businesses across Canada expect cost-related obstacles over the next three months, down from 65.4% in the second quarter of 2025. Within 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 July 2025, prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, increased 0.3% month over month and grew 0.8% year over year. Additionally, average hourly wages increased 3.3% on a year-over-year basis in July, following a growth of 3.2% in June 2025,” explained Statistics Canada.
“Within this environment, nearly half (45.2%) of businesses expect inflation to be an obstacle over the next three months. This proportion is nearly double that of the next most expected obstacle, cost of inputs (25.4%). Businesses expecting inflation to be an obstacle were led by those in accommodation and food services (56.6%), other services (except public administration) (54.7%) and retail trade (52.5%).
“Cost of inputs—which includes costs of labour, raw materials and energy—is the second most expected obstacle; this obstacle is expected by over one-quarter (25.4%) of businesses. This obstacle is most commonly expected by businesses in agriculture, forestry, fishing and hunting (55.9%), manufacturing (40.4%) and accommodation and food services (40.0%).
“When asked to indicate which expected obstacle would be the most challenging over the next three months, 13.3% of businesses expect it to be inflation, 9.7%, recruiting skilled employees, and 5.5%, cost of inputs.”
Photo: Christina Morillo
Nearly two-fifths of businesses plan to pass onto customers cost increases due to tariffs over the next 12 months
In the third quarter of 2025, businesses were asked whether they had passed cost increases due to tariffs onto their customers over the past six months. Nearly one-quarter (24.9%) of businesses reported having done so, while over two-fifths (41.8%) had not passed any cost increases onto their customers. Meanwhile, one-third (33.3%) of businesses had not experienced any cost increases due to tariffs, said the report.
In contrast, nearly two-fifths (39.4%) of businesses were either very likely or somewhat likely to pass cost increases due to tariffs onto their customers over the next 12 months, compared with 15.4% of businesses who were very unlikely or somewhat unlikely to do the same. Additionally, 27.2% of businesses did not expect any cost increases due to tariffs over the next 12 months, it added.
Nearly one-fifth of businesses experience an increase in sales of Canadian products
“In the third quarter of 2025, just over one-fifth (20.8%) of businesses changed their marketing practices over the past six months to promote Canadian products, led by businesses in retail trade (45.5%), accommodation and food services (39.3%) and wholesale trade (35.6%). In contrast, over two-thirds (69.0%) of businesses did not change their marketing practices to promote Canadian products over the past six months,” noted Statistics Canada.
“At the same time, nearly one-fifth (16.0%) of businesses experienced an increase in sales of Canadian products over the past six months. This was led by businesses in retail trade (40.7%), wholesale trade (33.1%) and accommodation and food services (30.2%). Comparatively, just over two-thirds (66.8%) of businesses did not experience an increase in sales of their Canadian products over the past six months, and a further 17.2% of businesses were unsure if they had.”
Majority of businesses foresee no immediate concerns over their ability to operate or maintain staff due to U.S. and Canadian tariffs
In the third quarter of 2025, 5.8% of businesses anticipate being unable to continue operating past the next 12 months if tariffs imposed by the United States and Canada remain at their current levels. A further 41.3% of businesses are unsure how long they would be able to continue to operate. At the same time, over half (53.0%) of businesses expect to be able to operate for 12 months or longer if the tariffs imposed by the United States and Canada remain at their current levels. This expectation was most common among businesses in finance and insurance (66.7%) and least common among businesses in transportation and warehousing (32.8%), said the report.
Furthermore, 51.6% of businesses across Canada anticipate being able to maintain their current level of staffing over the next 12 months or longer if the tariffs imposed by the United States and Canada remain at their current levels. This was most commonly anticipated by businesses in real estate and rental and leasing (64.3%), while it was least commonly anticipated by businesses in transportation and warehousing (30.3%). Meanwhile, 8.2% of businesses anticipate being able to maintain their current staffing level for less than 12 months, and 40.2% of businesses are unsure how long they can maintain their current level of staffing if tariffs remain at their current levels, it said.
Business optimism remains comparable with recent quarters
“Just over two-thirds (66.7%) of businesses in the third quarter of 2025 are very optimistic or somewhat optimistic about their outlook over the next 12 months. This is comparable with the 70.0% of businesses that reported feeling the same in the second quarter of 2025,” said Statistics Canada.
“Meanwhile, 13.8% of businesses expect their sales of goods or services to increase over the next three months, a decrease from 16.2% in the second quarter of 2025. At the same time, 18.9% of businesses expect sales of their goods or services to decrease. In addition, over one-fifth (20.6%) of businesses anticipate the selling price of their goods or services to increase over the next three months. This is led by businesses in manufacturing (35.0%), wholesale trade (32.8%) and retail trade (31.2%).”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
About Us
Canada’s Entrepreneur is the number one community media platform in Canada for entrepreneurs and business owners. Established in 2016, our podcast team has interviewed over 800 Canadian entrepreneurs from coast-to-coast. With hosts in each province, entrepreneurs have a local and national format to tell their stories, talk about their journey and provide inspiration for anyone starting their entrepreneurial journey and well- established founders.
The commitment to a grass roots approach has built a loyal audience on all our social channels and YouTube – 500,000+ lifetime YouTube views, 250,000 + audio downloads, 50,000 + average monthly social impressions, 15,000 + engaged social followers and 120,000 newsletter subscribers. Canada’s Entrepreneur is proud to provide a local, national and international presence for Canadian entrepreneurs to build their brand and tell their story
