Canadian employers are heading into the second half of the year with growing confidence, yet new survey data shows productivity remains the pressure they feel most sharply.
Canadian businesses are increasingly confident about their financial prospects, but new Employment Hero data shows productivity remains the single biggest pressure on employers heading into the second half of 2026.
The Quarterly SME Pulse, an ongoing survey of 600 senior business leaders in Canada conducted by research firm GWI between April and June 2026, found 58 per cent of leaders are optimistic about their company’s financial performance over the next six months. Just 18 per cent are pessimistic.
That confidence, however, sits alongside a stubborn set of operational strains. Productivity and output topped the list of business pressures at 41 per cent, ahead of wages, hiring and employee workload. The gap between how leaders feel and what they are dealing with day to day is the defining tension in this quarter’s data.
Confidence is not translating into expansion
Optimism is broad but cautious. Only 26 per cent of Canadian businesses describe their primary financial focus for the next six months as growth or aggressive expansion. The largest group, 41 per cent, is taking a balanced approach, while 20 per cent are prioritizing efficiency gains and 11 per cent are cutting costs.
In other words, most leaders feel good about where things are heading but are not yet backing that feeling with expansionary plans. Nearly a third of businesses are focused on doing more with what they already have. That framing matters when reading the pressure data. Efficiency-focused businesses feel productivity shortfalls acutely, because output per person is precisely the lever they are trying to pull.
Why productivity tops the pressure list
Productivity pressure is felt across businesses of every size, but it climbs steeply with headcount. Among businesses with fewer than 21 employees, 34 per cent report significant productivity pressure. That rises to 40 per cent for businesses with 21 to 150 employees, and reaches 50 per cent among employers with more than 150 staff.
Productivity also does not exist in isolation. The pressures sitting just behind it point to the same underlying strain: wages and remuneration at 39 per cent, employee workload and burnout at 36 per cent and hiring at 36 per cent.
Read together, the picture is one of teams being asked to deliver more while employers wrestle with the cost of paying them, the difficulty of adding to them and the risk of burning them out. Regulatory compliance, cited by 31 per cent, adds a further administrative drag on time that could otherwise go to productive work.
Employers are betting on AI to close the gap
Canadian businesses are already reaching for a response. The same survey found 62 per cent of leaders say their company’s investment in AI is increasing, with 16 per cent increasing it significantly.
Adoption is following the money. More than a third of businesses now use AI at a departmental level or deeper, and 27 per cent report company-wide enterprise use. Only 13 per cent are not using AI at all.
The open question is whether that investment converts into the output gains employers need. Spending on technology is the easy part. Embedding it into daily workflows so it genuinely lifts capacity is where the productivity dividend will be won or lost.
What to watch over the next six months
The third quarter will show whether optimism firms into action. Hiring intent offers an early signal: 34 per cent of businesses plan to expand or aggressively grow their teams, while 32 per cent will hire selectively and 24 per cent plan to hold steady.
If financial performance tracks the optimism leaders are reporting, expect balanced strategies to tilt toward growth later in the year. If productivity pressure persists, the efficiency camp is likely to grow instead and AI budgets will face sharper questions about return. For now, Canadian employers are confident but clear-eyed. The mood has improved. The workload has not.
