Quarterly survey finds challenges round recruitment, tariff pressures, AI privacy
Nearly three-quarters (72.6 percent) of Canadian businesses describe themselves as optimistic about their 12-month outlook. That is consistent with Q1 2026 (72.3 percent).
However, only 14.5 percent expect sales to increase over the next three months, down from 19.4 percent in Q2, finds Statistics Canada's Canadian Survey on Business Conditions, conducted from July to August 2026.
One in four Canadian businesses (25.2 percent) expect difficulty recruiting skilled employees over the next three months. That makes it the second most commonly anticipated obstacle, behind inflation at 41.6 percent.
Manufacturing leads sector exposure at 38.2 percent. Accommodation and food services follows at 33.6 percent, and health care and social assistance at 31.7 percent.
When asked to name their single most challenging obstacle, 8.9 percent of businesses nominated recruiting skilled employees.
Tariff pressures reshaping workforce budgets
Nearly a third of businesses (32.2 percent) expects US tariffs to negatively affect operations over the next year. Manufacturers are most exposed at 49.7 percent, followed by transportation and warehousing at 47.3 percent and wholesale trade at 45.1 percent.
Over the past 12 months, 27.4 percent of businesses passed tariff-related cost increases onto customers. Another 30.4 percent say they are likely to do so in the year ahead. When businesses absorb costs rather than pass them on, workforce decisions – including compensation and investment in training – come under pressure.
Statistics Canada reported that employment rose by 75,000 in July 2026, with average hourly wages up 2.8 per cent year over year. The labour market is active, but competition for skilled workers across Canadian industries remains intense.
The picture is one of stability rather than expansion. Canadian business conditions in 2026 signal constrained growth and a widening AI capability gap. HR leaders tracking how Canada's talent shortages are reshaping long-term workforce strategy will recognise the pattern. Those who act on these signals now will be better positioned when conditions shift.
AI adoption growing
One quarter (25.2 percent) of businesses report plans to use AI over the next 12 months. That figure has risen sharply, from 14.5 percent in Q3 2025 and 10.6 percent in Q3 2024.
However, more than half (52.7 percent) still report no plans to adopt AI, down from 66.7 percent a year earlier. Among those with no plans, 79.1 percent say AI is simply not relevant to what they produce or deliver.
A further 10.8 percent cited privacy or security concerns, and 9.9 percent mentioned a lack of knowledge about AI's capabilities.
As AI adoption grows, required skills will shift. HR leaders who are building AI literacy across their organisations ahead of the curve will be better placed to close that gap.
