Ontario Business Trends October 2026 – Ontario Faces Headwinds, Yet Some Lumber Species Stay Steady
The summer period persisted with its many challenges, weather-wise with some excess rain in certain areas, high temperatures which did nothing to help the forest fires that raged across the country. The announcement in mid-July that the Canada-U.S.-Mexico (CUSMA) agreement will not be extended past 2036, and as of time of writing, the 50 percent tariffs imposed by Trump, as Canada stepped away from the talks of a trade deal, and would retaliate with equal tariffs, continued to cause uncertainty for businesses.
As well, the summer’s hardwood business slowdown weighed on Maple prices. The supply of Soft Maple exceeded demand for No. 1 Common and Better lumber. Contacts reported the demand for kiln-dried Hard Maple also slowed during this time. Red Oak markets were also softer as seasonal increased production combined with slower kiln-dried No. 1 Common and Better exports to China for some, resulted in producers lowering their sales prices. Kiln-dried White Oak prices were firmer at this time.
Reduction of several species’ production caused supply tightness, such as for Ash, and has caused it to be a best mover amid consistent demand both on domestic and export markets. Producers had no difficulty moving this species to both markets. The spread of the Emerald Ash Borer is keeping green output low, thus keeping prices trending higher.
Limited production of Aspen has kept some producers busy with steady inquiries on the domestic front, while others struggled to move their inventories. Prices remain steady. Kiln-dried and green figures were unchanged.
Basswood demand was reported as steady, as were prices earlier during the summer, but were now seen as having mixed results depending on areas contacted.
Demand for Birch remains steady following depressed prices which had caused producers to avoid cutting the species. For sorted Sap and Better, color specifications is drawing more interest than unselected stock.
Contacts noted that Hard Maple markets are average, and some reported having difficulty moving this species for both kiln-dried and green. Green No. 1 and 2 White and unselected appeared to be steady throughout August.
Soft Maple demand continues to be weak and excess supply continues to pressure kiln-dried Soft Maple prices lower. According to sources contacted, Soft Maple can be a worst seller or a best-seller.
Red Oak prices were seen as decreased in August compared to July. With a weaker demand from Chinese markets, production has risen over the summer for this species. Demand on domestic markets have been more favorable.
White Oak demand remains unchanged. Prices for middle and upper end items are holding firm. Buyers are willing to pay more for longer lengths or minimal sapwood.
In July, the Consumer Price Index (CPI) rose by 3.0 percent year-over-year (y/y), higher than June’s 2.8 percent increase.
Gasoline prices rose by 3.6 percent month-over-month and were 25.7 percent higher than a year ago. Food price growth (at stores and restaurants) decelerated to 3.0 percent (y/y) following a 3.5 percent increase in June.
Core CPI (excluding food and energy) grew by 1.9 percent in July (y/y), up from 1.8 percent in June. Gasoline, rent, and restaurant food were key upward contributors to y/y CPI growth.
On a seasonally adjusted basis, the CPI rose by 0.3 percent from the previous month (following a 0.1 percent decline in June).
The average of the Bank of Canada’s two preferred core inflation measures edged up slightly to 2.0 percent (y/y) in July—up from 1.9 percent in June. CPI-median increased to 2.0 percent (from 1.9 percent in June), while CPI-trim remained stable at 1.9 percent.
Canada’s CPI rose in July, in large part due to oil price increases after the reignition of conflict in the Middle East. With energy markets reeling from uncertainty, gasoline prices in Canada were 25.7 percent higher than a year ago. Air transportation prices were also 12.0 percent higher than at the same time last year. However, changes for other goods and services helped to moderate overall price growth. Excluding gasoline, the CPI grew by a more modest 2.2 percent (y/y). In part due to falling rent costs, shelter price growth fell to 1.3 percent from 1.5 percent in June. The pace of food price growth also moderated. Grocery prices increased by 3.1 percent—a notable deceleration from the 3.9 percent reported last month.
Energy markets continue to play a central role in shaping near-term CPI growth. Gasoline prices have been the main contributor to upward price growth over the last several months—and will remain so until greater certainty about the future of shipping through the Strait of Hormuz is achieved. With core inflation around 2.0 percent and food price growth cooling, the pass-through of higher energy costs doesn’t appear to be widespread. Yet, the longer that energy prices remain elevated, the higher the risk that fuel and transportation costs will pass through to other goods and services.
Over a longer horizon, trade negotiations between Canada and the United States will influence the path of price growth. The talks that were underway, but ended in Canada walking away from a trade deal, consumer prices in Canada could be pulled in many directions. Weaker domestic demand stemming from job losses could pull price growth down, though weakness in the Canadian dollar could make imported goods more expensive, pushing prices higher. The retaliatory counter-tariffs on Canada’s part will also have a direct impact on CPI growth, likely adding to the prices consumers pay for any affected goods.
There is little urgency for the Bank of Canada to change its policy rate. While headline inflation sits at the top of the Bank’s inflation control range, the cause of the current inflationary spike is well-understood. Inflation should ease following an end to the conflict in the Middle East and a normalization of global energy flows. Core measures of inflation, which attempt to extract the underlying trend of price growth, remain modest. At the same time, economic growth has picked up. Preliminary estimates show that Canada’s real GDP posted a solid rebound in the second quarter of this year. These circumstances give the Bank ample room to sit on the sidelines. However, the risk of ongoing conflict in the Middle East, persistently elevated oil prices, and broader pass-through to other prices could change this calculus.
