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The Main Street Quarterly

 

Main Takeaways of the Q1 2026 edition

 

  • 1.6% GDP growth expected for Q1 and Q2 2026.

  • Small firms plan to invest in areas where they have already been investing.

  • Investment plans vary by sector but employee training is prevalent.

  • Job vacancy rate steady at 2.8% for the fifth consecutive quarter.

 

 

Canadian GDP expected to rebound in 2026 Q1 and 2026 Q2  

 

Economic forecasts based on the most recent monthly Business Barometer® data (April 2026)  indicate that GDP declined by 0.6% in 2025 Q4 (annualized rate). Despite this challenging end to the year, the forecasts show a good recovery for the first half of 2026, with increases of 1.6% in both Q1 and Q2. This strength stems from strong oil and gas production amid geopolitical tensions, as well as sustained construction activity. 

Retail sales growth continued to slow in 2025 Q4, reaching only 0.2%. However, forecasts point toward a strong rebound in early 2026, with projected increases of 6.8% in Q1 and 2.0% in Q2. Year-over-year, this puts sales growth just in line with inflation.

CPI inflation rose to 2.2% in 2025 Q4 and remained at a similar level for 2026 Q1. Excluding food and energy, inflation remained at 2.5% at year-end before decreasing to 2.1% in 2026 Q1. The uptick forecast in total CPI inflation for 2026 Q2 (2.9%) is consistent with geopolitical tensions in Iran, maintaining medium-term pressure on prices.

Private investment continued to decline with a 0.2% drop in 2025 Q4, closing the year with an overall contraction of 1.7%. However, forecasts indicate a trend reversal for 2026, with a recovery in investment of 3.1% in Q1 and 2.9% in Q2.

Payroll employment grew by 0.2% in 2025 Q4, bringing year-over-year growth to 0.2%. This pace is expected to strengthen at the start of 2026, with projected growth of 1.4% for Q1. This acceleration in hiring is consistent with GDP growth forecasts for the same period, signalling a certain recovery in economic activity.

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®.

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 small business investment plans with a more detailed look by sector also. 

Next release will be around the mid July 2026.  For the media release, click here.

Related Documents

Full Report

Forecasts

Job Vacancies 

In Focus

Sectoral Profile

Methodology
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