Canadian businesses are feeling more hopeful about 2026, despite ongoing challenges with costs and staffing, according to new data from Statistics Canada. In the first quarter of the year, about 73% of businesses said they were optimistic about their future, a noticeable jump from around 66% in the last two quarters of 2025.
The data comes from a survey conducted by Statistics Canada from January to February 2026. This survey gave a snapshot of how businesses see the current environment and what they expect ahead. This timing followed a sluggish end to 2025, when the country’s economy barely grew, with no change in real GDP in November and a small dip in October. Inflation slowed slightly, rising 2.3% in January compared to 2.4% in December, while employment dipped a bit as well.
Costs remain a key worry, although some pressures have eased. Around 59% of businesses expected cost challenges in the next three months, down a bit from over 61% in late 2025. These challenges include things like inflation, rising prices for raw materials, higher interest and debt costs, insurance, property taxes, and transportation expenses. Raw material prices jumped 7.7% in January alone compared to the previous month, and wages grew by 3.3% year over year.
Inflation was the most common concern, flagged by just over 40% of businesses. This worry was especially strong in sectors like accommodation and food services, agriculture, and wholesale trade. When asked what single issue would be the toughest in the coming months, about 11% pointed to difficulty hiring skilled workers, 10.5% mentioned inflation, and nearly 7% cited input costs.
Finding skilled employees is a big challenge. A quarter of businesses saw recruitment as a major obstacle, particularly in fields such as administrative support, waste management, construction, and hospitality.
On a brighter note, some businesses are cautiously hopeful about sales and prices. About 18% expected sales to rise soon, up from 16% late last year. Meanwhile, 23% planned to increase the prices of their goods or services. Businesses in food service, retail, and manufacturing were the most likely to raise prices.
Trade tensions with the U.S. continue to affect Canadian companies. Almost a third of businesses said U.S. tariffs on Canadian imports hurt their operations in the past year. Manufacturing, agriculture, and wholesale trade sectors reported the most negative impacts. However, a small number said tariffs had a positive effect, and just over half felt no impact at all.
Regarding costs from tariffs, about 27% of businesses passed those expenses on to customers, but more than a third did not face any tariff-related cost increases. Looking ahead, about 34% said they are likely to pass such costs to customers if they occur in the next year.
In recent news, the U.S. Supreme Court ruled 6-3 that former President Trump’s use of emergency powers to impose some tariffs on Canada and other countries was illegal. Despite this, Trump later suggested he might push for even stronger trade actions.
Overall, Canadian businesses seem to be starting the year with more confidence, balancing hope for growth with careful attention to the cost pressures and staffing shortages they face.