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The Bank of Canada summarizes answers from its survey into a single indicator of business confidence and sales expectations. This measure improved marginally from the second quarter of the year – when the U.S. tariff campaign took full force – but was still well below historical averages.

Uncertainty remains the top concern cited among ´ºÉ«Ö±²¥ businesses, though relatively fewer are reporting worries about financial, economic and political conditions from the previous quarter. Cost pressures, slowing demand and taxes and regulations round out the top four concerns pressing businesses in the third quarter.

Firms are spending more on routine maintenance rather than growing their businesses, the survey reported.

Most exporters report their goods are still entering the U.S. tariff-free, but firms in the steel and aluminum industries are expressing doubt that overseas markets can offset the hit from higher duties in the U.S. market.

"Although some exports of primary aluminum have been redirected to Europe, these exporters view this strategy as an unsustainable alternative to U.S. market access because of concerns about long-term profitability," the business outlook survey said.

Business in Saskatchewan also told the Bank of Canada that Chinese tariffs on canola and other agricultural products are weighing on their investment plans.

The survey showed nearly a third of businesses are now expecting a recession to hit Canada, up five percentage points from the last survey.

The Bank of Canada also released its related quarter survey of consumers on Monday showing tariffs are still weighing on ´ºÉ«Ö±²¥s’ finances.

That report showed two-thirds of ´ºÉ«Ö±²¥s are expecting a recession – "a much larger share than before the (trade) conflict began" – though most households feel their own financial health has improved from the previous quarter.

Businesses were reporting stronger consumer spending patterns compared to sharp lows at the beginning of the year. Lower interest rates from the Bank of Canada, cheaper gas prices and still-strong "Buy ´ºÉ«Ö±²¥" demand was helping to offset lower sales from economic uncertainty, that survey reported.

The Bank of Canada’s overall consumer indicator improved in the third quarter but, like the measure for businesses, remains well below historical averages.

Dragging down this indicator was deteriorating confidence in the labour market.

Public sector workers reported a lower probability of leaving or finding a new job, which the report said could be linked to the federal government’s cost-cutting review.

The surveys which gauge business and consumer health come ahead of the Bank of Canada's next interest rate decision set for Oct. 29.

This report by ´ºÉ«Ö±²¥was first published Oct. 20, 2025.