As part of our Data for Business initiative, the Langley Chamber is partnering with the Canadian Chamber of Commerce’s Business Data Lab to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions.  Read our latest update:

The latest Q1 2026 Business Insights Quarterly, informed by input from nearly 9000 businesses,  points to an economy that is still growing, but clearly losing momentum. Canada is avoiding a downturn for now, but weaker demand, cautious consumer spending, and ongoing uncertainty are holding back business confidence and investment.

The report also captures business conditions before the latest geopolitical developments in the Gulf, meaning some cost pressures — particularly around energy — may now be even more significant than the data suggests.

Modest growth is still expected in 2026, potentially reaching 2.2%, but the overall picture is one of fragile growth rather than broad-based economic strength.

Consumer Demand Remains Weak

One of the clearest messages from the report is that demand is now a major challenge for businesses. While the economy continues to grow modestly, real consumer spending per person remains negative and has been below zero since 2023.

For businesses, this matters. Weak demand means customers are more cautious, sales growth is harder to achieve, and many firms are focused less on expansion and more on managing uncertainty.

This is also showing up in business formation. After a surge of business creation following the pandemic, Canada has now seen six straight quarters of net business losses, with more businesses closing than being created. That points to weakening business dynamism and a more difficult environment for entrepreneurship, growth, and renewal.

Business Sentiment Remains Below Neutral

Business sentiment remains below neutral, with seven consecutive quarters of negative business expectations. That signals persistent caution among firms.

There is some positive news: Q1 2026, while still negative overall, showed the strongest outlook since Q2 2024. Sales, employment, and investment expectations have turned positive, suggesting some businesses are preparing to move forward.

However, the overall outlook remains weighed down by weak profitability expectations. In other words, businesses may expect to sell, hire, or invest more, but they remain concerned about whether those activities will generate healthy margins.

The report also highlights a widening gap between large and small firms. Larger firms are more optimistic and are continuing to grow employment, while small businesses remain more subdued. This points to uneven resilience across the economy, with smaller firms facing greater difficulty absorbing uncertainty, cost increases, and softer demand.

Key Business Obstacles

Inflation remains the top concern for businesses by a significant margin. While cost pressures had been easing, this data was collected before recent energy market volatility, and higher energy prices could reverse some of that progress if they persist.

The top business obstacles identified in the report include:

• Inflation
• Recruiting skilled employees
• Cost of inputs
• Insurance costs
• Fluctuations in demand / attracting customers

Skills gaps also remain widespread, with nearly half of firms reporting gaps. Most businesses are responding through training rather than simply hiring externally, which reflects both the difficulty of recruitment and the need to build capacity within existing teams.

Trade and Competitiveness Remain Under Pressure

Trade uncertainty continues to weigh on business confidence, particularly among exporters. Sentiment among exporting firms remains fragile, with policy risks and tariff impacts creating additional challenges.

About one-third of businesses report negative impacts from tariffs, with goods-producing firms, upstream exporters, and transportation and warehousing businesses among those most affected.

While some trade diversification is happening outside the US, it remains narrow. Much of the growth is coming from existing exporters doing more in non-US markets, rather than new firms entering global markets.

At the same time, USMCA utilization is at a 20-year high, showing that firms are making greater use of existing trade agreements rather than pursuing broader new market strategies.

Businesses are adapting cautiously. The most common response to trade pressures remains price increases, rather than major shifts in supply chains, markets, or operations.

What This Means for Business

The Q1 data points to an economy that is still moving forward, but with less momentum and more caution.

For businesses, the key takeaways are:

• Growth is continuing, but it is fragile.
• Customer demand is softening.
• Profitability remains a major concern.
• Small businesses are feeling more pressure than larger firms.
• Labour shortages are easing, but hiring challenges remain.
• Cost pressures, especially inflation and inputs, continue to shape business decisions.
• Trade uncertainty is creating additional pressure for exporters and goods-producing firms.

Overall, the report reinforces what many businesses are already experiencing: the economy is continuing to be difficult to operate in. Businesses are operating carefully, with a strong focus on managing costs, protecting margins, and navigating uncertainty.

Full Report
Explore the full Q1 2026 Business Insights Quarterly report here.