Canada's GDP is expected to slow from 2.0% in the third quarter to 1.4% in the fourth, as tariffs and high fuel costs squeeze small businesses, finds the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB).
The CFIB is Canada's largest association of small and medium-sized businesses with 103,000 members across every industry and region.
"Many businesses have been dealing with soft demand and weak sales. With customers holding back, most are absorbing higher fuel costs rather than risk losing sales. At the same time, it's no surprise that some firms are looking to adjust their prices, with tariffs and higher fuel costs hitting them from all sides," said CFIB's chief economist and vice-president of research, Simon Gaudreault.
"This reflects an economy where businesses are faced with different realities and challenges, with some being impacted more by recent macroeconomic events and others still displaying resilience. Aggregate data is currently masking a tale of mixed business fates, and there is still significant uncertainty about when the Canadian economy will be able to really rebound, following the latest episodes of this trade war."
Key highlights of the Q3 2026 edition of the Main Street Quarterly report
CFIB's estimates and forecasts, developed in partnership with AppEco, suggest Canada's GDP is expected to grow by 2.0% in Q3 and 1.4% in Q4. Consumer Price Index (CPI) inflation is forecast to remain stable at 3.0% in Q3 and 2.9% in the fourth quarter.
Private investment plans are expected to grow by 5.2% and 1.6% in Q3 and Q4, respectively.
Amid rising cost pressures, nearly two in five (39%) businesses plan to increase prices over 3% over the next 12 months.
The Canada-U.S. trade war is adding to price pressure, with most businesses expecting to pass at least some tariff-related costs on to customers. Nearly three in 10 (28%) plan to pass through the full amount, while 18% haven't yet determined their pricing approach.
A special analysis on fuel costs shows that despite recent increases, about seven in 10 firms expect to pass on less than half of the higher fuel costs.
The new section on business dynamics shows that long-term business optimism proves to be a useful indicator of how variations in sentiment translate into business formation. For example, over the past four quarters, business optimism declined sharply and net business formation deteriorated, turning negative.
The private sector job vacancy rate edged down to 2.6% in Q3, representing 375,000 unfilled positions.