Message from the Business Data Lab

This edition of Business Insights Quarterly — featuring spotlights on AI adoption and SMEs — points to a Canadian economy that’s losing momentum, even as the headlines remain mixed. GDP growth is holding, but it’s running on fumes as consumer spending and business investment cool. Business sentiment reflects that reality: Confidence remains below the neutral mark, exporters are less upbeat, and profits and hiring expectations are still under strain. Regionally, the softening is most visible along Ontario’s trade corridor, while Quebec stands out as a relative bright spot.

Trade uncertainty is a major reason. With U.S. tariffs lingering and a CUSMA review on the horizon, many trade-exposed firms are shifting into “wait-and-see” mode. About one in three trade-engaged businesses reports being negatively affected by U.S. tariffs, and the hit rises with firm size. Yet most firms, especially smaller ones, have not taken meaningful action beyond price adjustments, suggesting that diversification and investment decisions may still be delayed until policy clarity improves.

Meanwhile, the labour market is cooling. Job vacancies have come down, job seekers have risen, and tightness is easing toward pre-pandemic norms. But the slowdown is uneven. Private-sector job growth has faded, while public-sector gains are doing more of the heavy lifting — masking weaker momentum underneath.

Canada’s AI story is also coming into focus. Adoption is rising, but the data suggest we’re in the “slow lane.” Where AI is spreading, it looks less like a near-term employment shock and more like a retooling wave. Firms are changing workflows and training staff, with limited reported impact on headcounts so far. High-adoption industries continue to add jobs, and youth employment is holding up in those sectors. BDL will continue monitoring AI diffusion in 2026.

Across these themes, the message is consistent — businesses are adapting but cautiously. With softer labour market conditions and elevated trade uncertainty, competitiveness will increasingly hinge on skills, investment, and the ability to adjust business models before external pressures force faster moves. The Business Data Lab remains committed to providing timely, data-driven insights to help firms and policymakers navigate what comes next.

For more insights — including regional, employment size and sector-level trends — explore our interactive Business Insights Tracker on the BDL website.

Patrick Gill

Vice President, Business Data Lab, Canadian Chamber of Commerce