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Labour market challenges deepen while confidence teeters, raising the stakes for CUSMA
Business Data Lab Q3 Business Insights Quarterly reveals that weak job creation and tariff pressures are weighing on Canadian companies.
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OTTAWA, ON – September 23, 2025 — Canadian businesses are navigating a fragile recovery as trade tensions and a cooling labour market weigh on confidence, according to the Q3 edition of Business Insights Quarterly (BIQ) from the Canadian Chamber of Commerce’s Business Data Lab (BDL).
After five consecutive declines, overall business confidence steadied this quarter, but firms remain cautious. A sharp -1.6% annualized contraction in Q2 2025 — the steepest since the pandemic — highlighted how exposed Canada is to global export shocks and weak investment.
Businesses are showing remarkable resilience in the face of policy uncertainty, tariff threats and a softening labour market,” said Patrick Gill, Vice President of the Business Data Lab. “With CUSMA review approaching, the stakes for Canadian competitiveness are high.
Key Findings:
- Confidence steadies but fragility persists: Business confidence held flat in Q3 after five straight quarterly declines, signalling caution rather than renewed optimism.
- Tariff risks mount: One in three trade-engaged firms reports negative impacts from U.S. tariffs, with manufacturers and retailers hit hardest. CUSMA preference utilization surged to a 20-year high in July as businesses worked to preserve margins and avoid extra costs.
- Labour market softens: Job vacancies have declined and unemployment has ticked up. Challenges remain acute in construction, accommodation and food services, and agriculture. Youth unemployment continues to sit well above pre-pandemic levels, but not for the reasons some have assumed.
- Weak demand is a leading obstacle: Sluggish consumer demand has now been the top-reported barrier to growth for four consecutive quarters, outpacing labour and financing challenges.
- Small firms are driving trade resilience: Micro-exporters recorded the fastest gains in U.S. sales, helping to offset muted optimism among larger firms.
Looking ahead, BDL’s new real-time nowcast model, BDLNow, projects continued low growth for Canada’s economy at just 1.7% for Q3 presently. Despite recent upward revisions from the model, the overall trend is still down, reflecting the weaker economic data in recent months.
The findings underscore the balancing act for Canadian businesses: Navigating rising trade frictions and softer domestic demand while preparing for policy uncertainty tied to upcoming CUSMA processes.
About Business Data Lab (BDL)
We know that 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, we strive to ensure that rapid economic change and shifting business dynamics don’t leave Canada’s decision-makers behind. We are 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
Rewa Mourad
Strategic Communications and Content Specialist
rmourad@chamber.ca
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