Canada Is Losing Ground as Economic Conditions Erode Business Confidence

May 5, 2026

Share:

Ottawa, ON – May 5, 2026 — On the surface, Canada’s economy is stable and edging slightly upward. Beneath the surface, growth for all is not guaranteed. The Business Data Lab’s (BDL) Q1 2026 Business Insights Quarterly (BIQ), released today, reveals a slowdown, as weaker demand and growing caution hold back business success.

Though this edition captures conditions before the latest geopolitical developments in the Middle East, it already points to an economy losing steam. Demand is softening, consumer spending is cautious and many businesses are focused more on managing uncertainty than on growing.

Trade is a big reason why. A year after “Liberation Day”, when tariffs and disruptions began to reshape the landscape, businesses are still adjusting but not in ways that drive expansion. Export growth beyond the U.S. is being led by companies that were already exporting, not new firms entering global markets. And rather than changing course, many businesses are responding by raising prices or delaying decisions instead of exploring new markets or supply chains.

“Canada’s economy is proving resilient, but resilience alone won’t drive long-term growth,” said Patrick Gill, Vice President of the Canadian Chamber of Commerce’s Business Data Lab. “We’re seeing an economy that is holding steady on the surface, but when you look deeper, businesses are adapting cautiously — and often defensively — to a more uncertain environment. The focus right now is on managing risk rather than expanding, and it’s holding back momentum.”

That caution is showing up across the economy. Business outlook has now been below neutral for seven straight quarters, and confidence — especially among exporters — continues to weaken. At the same time, growth is becoming more uneven: Larger firms continue to hire and expand, while small and mid-sized businesses remain constrained, widening the gap across the economy.

What’s holding businesses back is also shifting. Labour needs are no longer the main issue; weak demand is. While more workers are available and job vacancies are easing, hiring has slowed. Many businesses are choosing to train existing employees rather than bring on new staff to fill skill gaps.

The report also points to a deeper concern: Canada is now losing more businesses than it is creating, signaling a gradual loss of economic dynamism. Even as business closures begin to stabilize, they continue to outpace new entrants, meaning fewer new firms are starting, fewer are scaling and the pipeline for future growth is weakening.

“Without stronger conditions for businesses to invest, grow and reach new markets, the risk isn’t a sharp downturn; it’s the slow erosion effect,” Gill added. “Turning that around means creating the right environment for businesses — especially small and mid-sized firms — to scale, compete and move forward with confidence.”

BDL will continue to monitor these trends and provide timely, data-driven insights to support businesses and policymakers navigating a rapidly evolving economic environment.

About the Business Data Lab (BDL)  

Turning the overwhelming amount of economic data out there into actionable insights is a challenge for many organizations. That’s why the Business Data Lab (BDL), launched in February 2022 by the Canadian Chamber of Commerce, provides free tools and real-time insights that help organizations understand Canada’s economy as it is now and as it could be in the future. With support from Statistics Canada and funding from Innovation, Science and Economic Development Canada, BDL strives to ensure that rapid economic change and shifting business dynamics don’t leave Canada’s decision-makers behind. BDL is democratizing data on Canadian business conditions. By providing future-focused, real-time, and local insights, we help organizations better understand and navigate the Canadian economy. 

About the Canadian Chamber of Commerce — The Future of Business Success 

The Canadian Chamber of Commerce is Canada’s largest and most activated business network — representing over 400 chambers of commerce and boards of trade and more than 200,000 business of all sizes, from all sectors of the economy and from every part of the country — working to create the conditions for our collective success. The Canadian Chamber of Commerce is the undisputed champion and catalyst for the future of business success. From working with government on economy-friendly policy to providing services that inform commerce and enable trade, we give each of our members more of what they need to succeed: insight into markets, competitors and trends, influence over the decisions and policies that drive business success, and impact on business and economic performance.   

Media Contact

Shane Mackenzie
Vice President, Media and Stakeholder Communications
613.302.7683
smackenzie@chamber.ca