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The Main Street Quarterly, 2025 Q2

Canadian economy expected to see negative growth in the second and third quarter of 2025

Economic forecasts based on the most recent monthly Business Barometer® data (July) indicate that GDP growth fell 0.8% in 2025 Q2 and is expected to decline further by 0.8% in Q3. This contraction reflects persistently low business confidence, driven by trade tensions, and weakness in manufacturing, particularly in the transportation, machinery, and oil and gas sectors.

 Retail sales slowed in 2025 Q2, growing by 4.6% in nominal terms. While strength persisted in Q1, as many businesses and organizations wanted to place orders ahead of the tariffs’ implementation, growth is expected to moderate to 2.0% in Q3.

CPI inflation slowed to 1.8% in 2025 Q2 and is expected to rise slightly to 1.9% in Q3. The overall deceleration in prices was mainly driven by falling energy costs and lower prices for travel services, while increases in food and shelter costs provided some upward pressure.

Private investment contracted by 3.1% in 2025 Q1, and persistent uncertainty is constraining business investment plans, with estimates pointing to a 13.0% drop in Q2 and a further 6.9% contraction in Q3. This reflects a collapse in capital spending amid deteriorating confidence, especially in goods-producing sectors facing global trade instability and volatile input prices.

Payroll employment growth evolved broadly as expected in 2025 Q1, with a modest gain of 0.4%. However, employment is expected to contract by 1.1% in Q2, followed by a more moderate decline of 0.8% in Q3. This pattern aligns with the broader economic slowdown.

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 tariffs and their growing impact on supply chains. This edition shows a deeper sectoral analysis of the wholesale sector.

Next release will be around the end of October 2025.  For the media release, click here. 

 

Related Documents

Full Report

Forecasts

Job Vacancies 

In Focus

Sectoral Profile

Methodology

 
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