Canadian economy to see slow growth in the third and fourth quarter of 2025
Economic forecasts based on the most recent monthly Business Barometer® data (October) indicate that GDP grew by 0.8% in the third quarter of 2025, and that the last quarter should be virtually flat. This places 2025 growth at 1.2% for the year, a slowdown compared to 2024, but resilient given the cocktail of commercial tensions observed.
Retail sales were slightly stronger than anticipated in the third quarter with nominal growth of 2.1%. The trend is expected to maintain in the fourth quarter, with growth forecast at 2.9%. For 2025, nominal retail sales progressed more than the previous year, despite declining inflation.
CPI inflation rose to 2.0% in the third quarter and is expected to remain stable for the rest of the year. Excluding food and energy, inflation hovers around 2.5% with no clear trend. With total inflation at the Bank of Canada's target rate, one can say that the central bank's strategy worked out, even though significant uncertainty remains going forward.
Private investment declined by 2.4% in the second quarter of 2025, and ongoing uncertainty continues to weigh on business plans. Estimates point to a 3.7% decline in the third quarter and a further contraction of 4.5% in the fourth quarter. This slowdown reflects a sharp decline in investment spending amid deteriorating business confidence, particularly in goods-producing sectors affected by global trade instability and input price volatility. Overall, 2025 saw a contraction of investments of 1%, following a decline of 1.4% in 2024.
Payroll employment fell by 0.1% in the second quarter, but this is expected to reverse in the third quarter with growth of 0.7%. Employment growth is then expected to keep track with GDP at 0.2% in the fourth quarter. This places yearly growth at 0.4%, a very weak reading.
Those are the recent results from The Main Street Quarterly, CFIB’s economic publication. CFIB and consulting firm AppEco have partnered to develop early short-term economic forecasts of some key macroeconomic indicators, leveraging the timeliness of CFIB’s Your Business Outlook survey, the same survey used to create CFIB’s Monthly Business Barometer®.
The Main Street Quarterly also contains CFIB’s latest estimates of private sector job vacancies and an interactive page. The ‘In Focus’ section, which covers a specific topic each quarter, focuses currently on the Buy Canadian wave. This edition shows a deeper sectoral analysis of the goods versus services firms.
Next release will be around the end of January 2026. For the media release, click here.
Related Documents
Full Report
- Main Street Quarterly Q3 2025
Forecasts
- Forecasts Q3 2025
Job Vacancies
- NEW Interactive page
- Help Wanted Q3 2025
In Focus
- NEW The Buy Canadian wave is here Q3 2025
- Tariffs and their growing impact on supply chains Q2 2025
- Impacts of U.S. tariffs on Canadian SMEs' prices Q1 2025
- Challenges faced by exporting and importing firms Q4 2024
- Growing versus declining firms Q3 2024
- Soaring costs of doing business Q2 2024
- Insufficient demand Q1 2024
- Small business price setting plans Q4 2023
- Commercial rents see steep hikes Q3 2023
- Businesses at risk of closing Q2 2023
- Small businesses' wage increase plans Q1 2023
- Investment plans in small firms Q4 2022
- The financial state of small businesses Q3 2022
Sectoral Profile
- NEW Diverging paths for goods versus services firms Q3 2025
- Wholesale Q2 2025
- Sectoral overview of the impacts of U.S. tariffs Q1 2025
- Financial activities, professional and business services Q4 2024
- Education and health care services Q3 2024
- Personal and miscellaneous services Q2 2024
- Construction Q2 2024
- Transportation Q1 2024
- Manufacturing Q4 2023
- Retail Q3 2023
- Hospitality Q1 2023
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