Business sentiment is subdued but remains above its survey low from the second quarter of 2025, according to the Bank of Canada’s Business Outlook Survey—Fourth Quarter of 2025.
The Business Outlook Survey was conducted by in-person, video and phone interviews from November 6 to 26, 2025. The Business Leaders’ Pulse is conducted online every month; the latest results are from October, November and December 2025.
Overview
- Firms reported that sales growth has been weak over the past year largely due to the economic effects of trade tensions. They expect sales growth to improve slightly going forward.
- Export sales growth is expected to be modest. A small but increasing share of businesses reported higher sales to non-US markets in response to trade tensions with the United States.
- Most firms did not report binding capacity constraints or labour shortages. With demand expected to remain soft, the majority of businesses plan to maintain or decrease current staffing levels.
- Investment intentions improved slightly, but firms are prioritizing spending on routine maintenance, partly because of continued trade-related uncertainty. In the oil sector, investment is expected to decline in 2026 because of low oil prices.
- Businesses reported fewer pressures than last quarter from tariff-related cost increases, though these pressures remain prevalent. Most firms do not anticipate substantial increases in selling prices.
- Firms’ inflation expectations remain roughly stable between 2.5% and 3%.
“Trade-related uncertainty and the broad economic effects of tariffs continue to weigh on the outlooks of many firms. Businesses continue to cite uncertainty surrounding financial, economic and political conditions, slowing demand, and cost pressures as their most pressing concerns. Consistent with these ongoing concerns, sentiment remains subdued,” said the Bank.
“Meanwhile, the share of firms planning or budgeting for a recession in Canada over the next 12 months has eased from 33% to 22%. This is the lowest level reported in 2025, though it remains above 2024 levels.”
The Bank said firms reported weak sales growth over the past 12 months, with one-third of businesses citing a decline in their sales volumes. This share is above the historical average of about one-quarter.
“However, the balance of opinion on future sales indicators has turned positive—a greater number of firms see improved indicators than the number of firms that see deteriorated ones. Still, the balance remains below its historical average, suggesting only modest growth. While businesses continue to report negative effects—some coming directly from tariffs but even more coming indirectly from trade tensions—they do not expect these effects to worsen further.”
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, 2025 and 2026.
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