At a glance: three key takeaways 

• Despite Alberta’s strong headline economic momentum, local SMEs are navigating a profitability squeeze driven by shifting consumer demand, rising raw material prices, and soaring commercial rents.
• Businesses are adapting by splitting the burden of rising costs—raising prices and absorbing margin hits—while putting capital expansions on hold. This indicates a cautious hiring strategy.
• Direct and indirect tariffs impacts are the new norm. Success over the next twelve months will reward discipline, margin protection, and talent retention over aggressive top-line growth.

What has changed since we last talked?

Since our last Quarterly Pulse, the global and national economic landscapes have shifted. Trade negotiations with the U.S. have stalled, creating a new wave of uncertainty for the future of cross-border relationships. Globally, the conflict in Iran continues to keep the cost of critical inputs such as fuel and fertilizer elevated. Domestically, the Bank of Canada has signaled that rate hikes may be back on the table in order to lean against persistently high headline inflation. 

As ATB Economics’ latest forecast indicates, Alberta continues to demonstrate resilience. The provincial economy is ending 2026 in a relatively strong position, with real GDP forecast to grow by 2.6% this year—outpacing the national growth rate of 0.9%. This is due, in part, to a relatively smaller tariff burden than other provinces and momentum in the energy sector—boosted by rising production and higher oil prices. Other factors setting Alberta apart include stronger employment, population, and retail sales growth. There is also upside to our forecast if major projects—such as the Pacific Link pipeline—reach a positive final investment decision.

Bridging the gap

For a business owner, strong provincial GDP or surging energy exports mean little if your operations are caught between rising input costs, supply chain friction, and shifting consumer demand. Uncertainty is no longer a temporary headwind; it is the baseline for operating a business. 

This second edition of the Pulse is designed to bridge the gap between headline numbers and what small and medium-sized enterprises (SMEs) experience. In the following sections, we’ll explore how businesses have adapted to uncertainty through our inaugural Small Business Pulse survey, client interview, and analyze the economic trends that explain why businesses may be feeling the squeeze. The aim of today’s Small Business Pulse is to give readers a better understanding of the current economic operating environment to empower you to make the decisions necessary for your business. 

What do business owners have to say?

We surveyed 78 Alberta business owners between August 24, 2026, and September 12, 2026   to better understand what is really on their minds. We asked about their biggest challenges, exposure to U.S. tariffs, the outlook for their business, and more. Responses came from a diverse set of industries—from healthcare and wellness to construction—yet a few operational trends emerged. Here’s what we heard (and some data) that helps explain why they may be feeling the way they do.

1. Weak consumer demand

About 30% of respondents highlighted this as one of the top factors currently creating the greatest difficulty for their business.

What the data says: This may seem surprising since Alberta’s retail sales have surged 7.6% year-to-date. However, according to ATB’s latest outlook, a rising share of household budgets is now covering essential food and energy costs, leaving less room for discretionary purchases.

The latest Bank of Canada Survey of Consumer Expectations underscores this: consumers cite higher prices, geopolitical uncertainty, and soaring housing costs as the top factors dampening their spending plans over the next twelve months.

2. Raw materials and input costs

Nearly 28% of respondents cited higher raw materials and input costs as one of the greatest difficulties for their businesses.

What the data says: The pressure starts upstream: with the war in Iran disrupting energy markets, Canada’s Raw Materials Price Index—excluding energy products has climbed 17% from a year ago. By the time those costs reach end-consumers, they show up in different places: for example, 4% higher input costs for food and beverage businesses and higher freight and fuel costs for nearly everyone.

3. Rent and occupancy costs

21% of business owners reported that the cost of rent/occupancy was one of the biggest challenges for their business.

What the data says: According to Statistics Canada’s Commercial Rents Services Price Index, since January 2020, overall commercial rents in Alberta have increased by 15% in June 2026. If we break down that figure, we observe that retail buildings have seen their rent increase by 29%, over that same time period. 

The data also tells us that Calgary and Edmonton saw their commercial rents rise by 12.3% and 14.2%, respectively.

Adapting to the new conditions

When asked how businesses were adapting to costs pressures and operational bottlenecks, Alberta SMEs pointed to three main adjustments:

1. Raising end-user prices (40%)
2. Absorbing margin impact (30%)
3. Delaying or cancelling capital expansions/investments (28%)

These adjustments highlight an economic-tradeoff: consumers face higher prices, businesses margins are thin, and capital expansions remain on hold. Which in turn leads to slower hiring intentions. Nearly 70% of respondents planned to maintain employee headcount over the next three to six months, while 27% indicated they had plans to increase their employee headcount. 

However, this holding pattern reflects a degree of local resilience when contrasted against national trends. The September 2026 CFIB Business Barometer revealed that national full-time staffing plans have turned negative, with more Canadian employers planning layoffs (16%) than hires (13%). 

While the resurgence of the U.S.-Canada trade war dominates the headlines, our survey reveals that the average Alberta SME remains largely insulated from direct cross-border friction. Over 50% of respondents indicated that none of their direct input costs are U.S.-sourced, and 82% generate zero revenue from U.S. customers. Consequently, 68% of local owners reported that the uncertainty surrounding the new 50% U.S. tariffs and Canadian counter-tariffs has had minimal to no direct impact on their operations. 

However, a small sample size warrants a note of caution. While direct tariff exposure is low for the average local retailer or wellness clinic, the indirect impacts of a trade war are unavoidable. Alberta benefits from lower overall tariff exposure relative to the rest of the country. That being said, if Alberta businesses—especially smaller businesses with potentially less runway to adapt—are operating in sectors impacted by the latest round of U.S. tariffs and Canadian counter-tariffs, a 50% tariff can have a much larger impact than headline numbers may indicate.

Bottom line

The data from the survey points to a clear theme: Alberta SMEs are navigating a persistent profitability squeeze. With consumer demand softening and fixed costs like rent and raw materials climbing, the baseline cost of doing business has fundamentally shifted. Furthermore, while most local businesses are insulated from the direct impact of cross-border tariffs, they are still managing the indirect fallout of supply chain friction and broad economic uncertainty.

In response, local business owners are indicating they are splitting the burden of higher costs—passing some to consumers via price hikes while absorbing the rest into their own margins—and pausing capital expansions; SMEs are buying themselves the runway to protect their current workforce. This strategy of holding headcount steady reflects a phase of caution.

While Alberta’s economy has consistently proven its resilience, these escalating cost pressures and supply chain friction are not temporary storms to simply wait out—they represent a fundamental shift in the business environment and are likely here to stay. Growing your business is still very much achievable where customer demand supports it, but the strategy requires greater precision. Success today looks like discipline—safeguarding profit margins, maintaining strong cash reserves, and holding onto the team that drives your operations.

Thank you for reading this edition of The Small Business Pulse. We hope these insights provide a clearer picture of how local business owners are navigating ongoing uncertainty and adapting to today’s operational pressures. 

What we’re watching for the next 6–12 months

• Tariff pass-through and trade friction: We will monitor the U.S.-Canada trade dispute and how new tariffs impact cross-border supply chains and whether those costs are being increasingly passed down to local consumers.
• The Bank of Canada’s Rate Trajectory: We are closely watching the central bank's monetary policy stance, specifically the growing risk that they may resume interest rate hikes to cool the economy if headline inflation remains stubbornly high—and if core inflation ticks up.
• Consumer Insolvencies and Debt Stress: As a critical red flag for economic health, insolvency filings gauge exactly when higher prices and borrowing costs begin pushing household budgets to their thresholds.
• Consumer Confidence and Discretionary Spending: We are tracking consumer sentiment indices to see how a shift in public confidence might  drag down non-essential retail spending.