Last quarter, firms described the economic environment as highly unpredictable, which made it difficult for them to form a clear outlook for the year ahead. This quarter, more firms can now form an outlook with greater confidence, although they still report that it is hard or somewhat hard to do so. Fewer businesses are considering extremely negative scenarios in their planning.
Nevertheless, uncertainty around financial, economic and political conditions remains the top concern for firms. While worries about tariffs directly affecting Canadian businesses have eased slightly, new concerns have emerged about the broader impacts of tariffs on the global economy and on demand in Canada. Uncertainty is still causing firms to hold off on new investment plans and to conservatively manage their finances, among other actions (Box 1).
Business sentiment, although still subdued, has improved from the sharp declines recorded in March and April 2025 (Chart 2). Both the previous declines and the recent rebound were seen across exporters and non-exporters, though sentiment among exporters in particular fell sharply during the earlier stage of the trade conflict. Similarly, the share of firms planning for a recession in Canada has declined slightly—from 32% to 28%—but remains above 2024 levels, reflecting ongoing concerns about trade tensions.
