Canadian small business sales remain lower than a year ago, as Q2 marks third consecutive quarterly decline

Toronto, ON – July 30, 2026 –Xero, the global small business platform, today released its quarterly (April-June 2026) Xero Small Business Insights (XSBI) report, a snapshot of the health of the Canadian small business sector based on actual aggregated and anonymized data from 12,000 Canadian small businesses using Xero, including sales performance, late payments, and time-to-be-paid. This quarter’s results point to continued pressure on small businesses, with persistent soft sales and cash flow challenges shaping the operating environment.

The latest XSBI data shows Canadian small businesses, in aggregate, continue to make fewer sales than a year ago. The 0.6% year-over-year fall in the June quarter is the third consecutive quarter of sales being lower than a year ago, with payment times also remaining elevated. Ongoing higher-than-usual gasoline prices have added to what were already difficult conditions for Canadians and continue to constrain consumer spending, squeeze profit margins and put pressure on cash flows.

“Canadian small businesses are likely to face continued economic uncertainty through the rest of 2026, with many business owners navigating ongoing cost pressures and cautious consumer spending,” said Ashalee Mohamed, Country Manager for Canada at Xero. “While some sectors may benefit from broader market trends, many small businesses will continue to focus on protecting cash flow, managing expenses and adapting to changing customer demand. Maintaining visibility into business performance and planning ahead will be key to helping small businesses navigate the coming months.”

Sales remain below year-ago levels as payment times stay elevated

Sales have been lower than a year ago for three consecutive quarters (-3.0% y/y in the March quarter and -1.3% y/y in the December quarter) and for eight of the past twelve months. The monthly data illustrates how rising gasoline prices have stretched household budgets and impacted small business sales over the quarter. In April, sales fell 2.7% y/y and 3.0% y/y in May, before rising 3.8% y/y in June, when gasoline prices dip below $1.70/l and freed up some capacity for spending. The June data should be treated with caution, however, as XSBI's late-reporting adjustment has been over-adjusting in recent months and the June result is likely to be revised down in future reports.

“Overall, the biggest positive from this data is that performance didn't get worse, but it is not improving much either,” said Louise Southall, Economist at Xero. “The continued geo-political conflicts and uncertainty have made conditions harder for Canadian small businesses, building on the impact of US trade policy since April 2025. Gasoline prices peaked in May, and while various ceasefire agreements have offered brief relief, none have been able to hold for more than a few weeks. The OECD expects the Canadian economy to grow just 1.2% in 2026, slower than the 1.7% recorded in 2025.”

Canadian small businesses were paid on average 11.3 days late in the June quarter, similar to the March quarter (11.4 days) but worse than in 2025 (10.5 days). Time to be paid, the length of time from when an invoice was issued to when it was paid, was 29.0 days in the June quarter, compared to 29.2 days in the March quarter and 27.1 days in 2025.

Regional picture: Maritime Provinces added to XSBI coverage

This quarter, XSBI expanded its provincial data set to include the Maritime Provinces, combining New Brunswick, Nova Scotia and Prince Edward Island. Sales results for the June quarter were:

• Alberta (+1.0% y/y) was the best performing province, a regional beneficiary of higher global oil prices.
• The Maritime Provinces had sales similar to the June quarter of last year (+0.2% y/y).
• Ontario (-0.3% y/y) had lower sales than a year ago.
• British Columbia (-1.7% y/y) also had lower sales than a year ago. However, invoices were paid in an average of 25.7 days, the best provincial result and an improvement on the March quarter (26.9 days).

The other provincial results on time to be paid for the June quarter were 28.4 days (Alberta), 30.0 days (Ontario) and 31.8 days (Maritime Provinces).

To access the latest data, visit the XSBI website.

ENDS

Media Contact

Xero Canada | Rola Tfaili | rola.tfaili@xero.com

About Xero

Xero is a global small business platform that helps customers supercharge their business by bringing together the most important small business tools, including accounting, payroll and payments, on one platform. Xero’s powerful platform helps customers automate routine tasks, get timely insights, and connects them with their data, their apps, and their accountant or bookkeeper so they can focus on what really matters. Trusted by millions of small businesses and accountants and bookkeepers globally, Xero makes life better for people in small business, their advisors, and communities around the world. For further information, please visit xero.com.

About Xero Small Business Insights

The aim of Xero Small Business Insights is to create insights to help inform decision makers in support of the small business economy as a whole. The principal source of small business insights in this report is customer data from Xero, a small business platform that supports online accounting and a range of other applications. Xero is a responsible custodian of our customers’ sensitive data and does not release any data that could identify individual businesses. The data used is aggregated and anonymized to ensure the privacy of Xero subscribers, and their counterparts.

As part of the program, we publish regular blogs and research notes and deep-dive special reports on specific small business topics. These can all be found at xero.com/xerosbi.

Methodology

Changes were made to the XSBI methodology in 2025. This includes changing the definition used for a small business and the way we identify regional-based businesses. Full details of the methodology used to construct Xero Small Business Insights can be found here.