Business leaders across Canada are becoming more cautious, but not for the same reasons in every industry.
That is one of the clearest messages from the Bank of Canada’s latest Business Outlook Survey, which found that overall business sentiment weakened during the second quarter of 2026 after improving over the previous three quarters. Companies reported softer domestic demand, higher input costs, and continued geopolitical uncertainty, even as exporters tied to commodities expressed greater optimism.
The survey offers one of the clearest snapshots of how Canadian businesses view the economy because it is based on interviews with approximately 100 firms across the country. While it is not a forecast, it often provides an early indication of the issues that will shape hiring, investment, and pricing decisions in the months ahead.
Perhaps the most notable finding was the growing divide between sectors.
Companies outside the Prairie provinces generally reported weaker sales expectations as consumers became more cautious and businesses dealt with higher fuel-related costs. By contrast, firms connected to the oil and gas industry expressed greater confidence, supported by elevated commodity prices and stronger export demand.
Hiring plans also appear to be cooling.
The survey found that businesses still intend to invest, but fewer expect to increase staffing over the next year. Labour shortages, which dominated conversations just a few years ago, are becoming less of a constraint for many employers. Instead, companies are placing greater emphasis on productivity and managing costs.
Inflation remains another concern.
Businesses reported expecting higher input costs and selling prices, largely because of elevated global oil prices. Even so, the survey suggested those inflation expectations eased somewhat after energy markets stabilized following the mid-June ceasefire between the United States and Iran.
For investors, the report reinforces the idea that Canada’s economy is moving at different speeds depending on the sector.
Energy producers continue benefiting from favourable market conditions, while businesses serving domestic consumers face a more challenging environment. That divergence may continue influencing corporate earnings and investment decisions throughout the second half of the year.
The Bank of Canada has emphasized that surveys such as these are only one factor in its policy decisions, but they remain an important gauge of business confidence. For companies planning expansion, hiring, or capital spending, sentiment often matters almost as much as hard economic data.
