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Investing.com -- Canadian firms remain cautiously optimistic while continuing to weather economic uncertainties, according to the third-quarter 2025 Canadian Survey on Business Conditions by Statistics Canada. Despite sustained headwinds, including inflation, labor costs, and tariff-related challenges, business sentiment on future outlooks remains relatively stable.
While the share of businesses expecting cost-related obstacles over the next three months declined slightly to 62.2% from 65.4% in the second quarter, inflation remains a top concern. Nearly half of all businesses (45.2%) cite inflation as an expected challenge, with exposure highest in accommodations, food services, and retail sectors, Statistics Canada said.
The second most cited cost-related issue, input costs such as labor and materials, was flagged by 25.4% of businesses, particularly in agriculture, manufacturing, and hospitality. A smaller proportion, 13.3%, consider inflation to be their most challenging expected obstacle, highlighting its weight among other operational concerns.
With consumer inflation rising 1.7% in July from a year earlier, and Canadian real gross domestic product slipping 0.1% in May for a second straight month, companies remain under pressure to manage price shocks. Wages also continued their gradual climb, rising 3.3% year-over-year in July, intensifying cost challenges for labor-intensive sectors.
Tariffs continue to influence pricing decisions. Although only 24.9% of businesses reported passing cost increases due to tariffs onto customers in the past six months, 39.4% indicate they are likely to do so over the next year, according to data from Statistics Canada.
Meanwhile, efforts to promote Canadian-made products are gaining some traction, with 20.8% of businesses adjusting marketing strategies in the last six months. Yet just 16.0% of firms reported an increase in sales of Canadian products, suggesting a gap between strategy and consumer uptake.
Across the board, the impact of current U.S.-Canada tariffs on business continuity appears limited in the short term. Only 5.8% anticipate being unable to operate beyond the next 12 months, while over half expect to remain viable if tariffs stay at current levels, Statistics Canada said.
As artificial intelligence adoption becomes a rising theme in productivity discourse, Canadian businesses remain largely on the sidelines. While 14.5% plan to leverage AI in the next year, two-thirds have no such plans, citing irrelevance to their operations or lack of knowledge about the technology.