Key trends in 2025
- Small business employment declined by 73,100 jobs in 2025 compared to 2024 (-1.38%).
- Two sectors experienced their largest declines since 2015: the professional services sector (NAICS 54) and the education sector (NAICS 61).
- Two sectors had notable growth in 2025: the accommodation and food services services sector (NAICS 72) and the manufacturing sector (NAICS 31-33).
Economic analysis
“In 2025, Canada’s small firms faced a tougher climate, but the slowdown was selective, not sweeping,” said Ufuk Akcigit, Professor of Economics at the University of Chicago. “While overall employment in small firms slipped, losses were sharply concentrated in professional services and education, which are sensitive to higher financing costs and slower client demand. At the same time, consumers kept showing up at restaurants and hotels and manufacturers started adding jobs again in the spring, reflecting pockets of resilient activity even as national GDP growth softened and exports struggled.
“These mixed signals line up with broader Canadian data showing modest overall growth last year, a labor market that eased from its red-hot pace, and the Bank of Canada easing policy to around 2.25% to support demand. Rather than a broad contraction, what we see is an economy where small firms are cautious about hiring, prioritizing productivity gains and marketing investments, and increasingly turning to tools like AI to do more with less: signs of adaptation in a shifting post-pandemic landscape.”
Official statistics
Growth in the accommodation and food services sector (noted above) is recorded in the latest available official statistics from Statistic Canada—which include large and mid-size businesses as well as small businesses—showing 2.5% annual GDP growth for the sector overall between October 2024 and October 2025. But official statistics for the manufacturing sector show declines in annual GDP and employment over the same period. A closer look at the sector’s employment data, however, shows monthly jobs growth returned in the spring of 2025, with 28,100 jobs added by December.
Turning to sectors with declining small business employment, the latest available Statistics Canada data shows an annual decline of 0.8% in professional services GDP in the 12 months to October 2025 and a decline of 1.8% in education sector GDP over the same period.
Survey insights
Data from recent surveys of Canadian businesses with up to 100 employees (commissioned by Intuit every 3 months) shows approximately a third of respondents (36%) had plans to expand their workforces over the three months to January 2026. Reflecting recent employment declines, this is 15 points lower than the peak recorded in April 2023, when 51% intended to hire. On a more positive note, the number of respondents reporting it’s easier to find skilled workers when hiring increased to more than 50% in July and October 2025, which is above the previous peak of 48% recorded in April 2023.
Turning to business challenges and priorities, inflation remains the number one challenge identified by respondents. Despite this, the number predicting costs will continue to rise over the next three months decreased in July 2025 and remained at the same level in October 2025. Asked what would be most beneficial to their business over the next three months, the top response throughout 2025 was a “successful marketing/advertising campaign” to boost revenue or demand. The survey also suggests many want to boost their productivity (defined as “higher output for the same or lower input costs”), with respondents increasingly turning to AI as a potential solution. In October 2025, almost two-thirds (65%) reported regular use of AI—up from 52% in July 2024. Of these, 74% said AI is making them more productive.
