TORONTO, Canada – The Canadian economy is expected to see negative growth in Q2 and Q3 of 2025, finds the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB).
Key highlights of the Q2 2025 edition of the Main Street Quarterly report
- CFIB’s estimates and forecasts in partnership with AppEco suggest Canadian economy fell 0.8 percent in Q2 and will further contract by 0.8 percent in Q3. Consumer Price Index (CPI) inflation slowed to 1.8percent in the second quarter and is forecasted to rise slightly to 1.9 percent in Q3.
- After contracting in Q1, private investment is estimated to nosedive by 13.0 percent in Q2 and further drop by 6.9 percent in Q3.
- The national private sector job vacancy rate held steady at 2.8 percent in Q2 2025. This represents 397,500 unfilled positions.
- A special analysis on the impact of tariffs on supply chains highlights that most businesses expect long-term supply disruptions, both abroad and domestically. More firms have been affected by supply chain challenges since March 2025, with wholesale and manufacturing sectors most impacted by Canada-U.S. border delays.
- The quarterly sectoral profile reveals that the lack of optimism in the wholesale industry reflects the significant decrease in the number of wholesale businesses with employees and also the steep decline in self-employed over the past decade. They are facing major challenges and are adjusting their pricing strategies in response to supply chain disruptions, rising input costs, and trade uncertainty.
Conclusions by CFIB’s chief economist and vice-president of research, Simon Gaudreault:
- While we forecast a contraction in the economy, at the same time certain indicators point out that it is normalizing in some ways. Inflation remains stable which puts us in a favourable position to contemplate easier monetary policy for the second half of the year. However, with Canada seeing a 1.9 percent inflation and unexpectedly adding jobs in June, the Bank of Canada may now decide to maintain its interest rate on July 30.
- The “one step forward, one step back” trade situation is driving low business confidence, translating into paused or cancelled investments. As trade tensions drag on, more businesses will be slowly adjusting to tariff threats and findings alternatives.
