GDP expected to rebound in Q2 and Q3 2026.
About 38% of SMEs report capital equipment and technology costs a challenge, up sharply since the pandemic.
More Canadian SMEs are diversifying their trade beyond the U.S.
Job vacancy rate steady at 2.8%.
Canadian GDP expected to rebound in 2026 Q1 and 2026 Q2
Economic forecasts based on the most recent monthly Business Barometer® data (June 2026) indicate that despite early-year weakness, GDP is expected to increase by 2.7% and 1.6% in the second and third quarter of 2026. This resilience is expected to be driven primarily by strong oil and gas production, as well as sustained activity in the construction sector.
Retail sales growth increased sharply in the first quarter of 2026, reaching 8.9%. Forecasts indicate that this growth should continue, albeit at a more moderate pace, with expected increases of 6.5% in the second quarter and 3.6% in the third quarter.
CPI inflation was relatively stable at 2.1% in Q1 2026. It rose to 3.1% year over year in Q2 2026 and is expected to edge up to 3.4% in Q3 2026. Core inflation, excluding food and energy, dropped slightly at 1.7% in the second quarter, but is expected to rise back up to 2.0% in Q3 2026. This rebound in inflation is occurring in a context of geopolitical tensions in Iran, which are maintaining medium-term pressure on prices.
Private investment continued to decline in the first quarter of 2026. Forecasts point to a much sharper contraction in the second and third quarters, with decreases of 6.3% and 4.7%, respectively. This weakness occurs amid ongoing uncertainty as CUSMA enters an annual review process.
Payroll employment remained stable in the first quarter of 2026. Forecasts point to a slight increase in the second and third quarters, with respective gains of 0.4% and 0.3%, suggesting moderate labour market growth, in line with recent quarters.
These 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®.
In this edition, we present two ‘In Focus’ sections: one covers the soaring costs of capital equipment and technology, while the other special analysis focuses on how trade uncertainty is reshaping small firms' strategies.
We added a new section which covers business dynamics, more specifically - business entry and exit trends.
The Main Street Quarterly also contains CFIB’s latest estimates of private sector job vacancies and an interactive page
Next release will be around the mid October 2026. For the media release, click here.
Business entry and exit trends Q2 2026