The Canadian economy is expected to show modest growth in the first half of 2026, finds the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB).
Key highlights of the Q1 2026 edition of the Main Street Quarterly report
- CFIB’s estimates and forecasts in partnership with AppEco suggest the Canadian economy grew 1.6% in Q1 2026 and is expected to increase to 1.6% in Q2. The Consumer Price Index (CPI) inflation is expected to be around 2.9% in Q2 2026.
- After declines all throughout last year, private investment is expected to recover by 3.1% in the first quarter and 2.9% in the second quarter.
- A special analysis this quarter reveals that small firms’ investment plans are edging back to their historical average. However, with business confidence indicating cautious optimism, business owners are prioritizing upkeep over expansion projects.
- The sectoral profile on investment shows that at least two-thirds of firms in every sector plan to invest in employee training. A strong majority of firms in most sectors look to invest in marketing and promotion, while at least half of firms across most sectors, plan to invest in non-AI technology or equipment.
- The Q1 2026 private sector job vacancy rate remained unchanged at 2.8%, representing 391,300 unfilled positions.
CFIB’s Chief Economist and Vice-President of Research, Simon Gaudreault, said: “While current geopolitical tensions and fuel volatility are putting pressure on consumers and businesses, we forecast the Canadian economy will show a modest recovery for the first half of 2026. This strength stems from strong oil and gas production as well as sustained construction activity. However, challenges persist and small business-friendly policies, such as the temporary pause on the federal fuel taxes, would provide a much-needed relief for firms that continue to face sky-high operating costs.
“After declining for most of 2025 and closing the year with an overall contraction of 1.7%, small firms’ investment plans are signalling positive but cautious sentiment. Most businesses remain focused on maintaining existing operations rather than on major expansion amid higher costs, uncertainty, and continued soft demand.”
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