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Canadian Federation of Independent Business

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CFIB outlook points to early 2026 economic rebound

Canada may be heading into a stronger start to 2026, according to new projections from the Canadian Federation of Independent Business.

The organization’s latest Main Street Quarterly report outlines modest growth at the end of last year and a more positive outlook for the months ahead.

CFIB’s estimates, developed with AppEco, show the economy expanded by 0.6 per cent in the final quarter of 2025.

The group expects growth to reach 3.4 per cent in the first quarter of 2026.

Inflation reached 2.2 per cent year‑over‑year in the fourth quarter and is expected to edge slightly higher to 2.3 per cent early this year.

CFIB added that inflation remains close to the Bank of Canada’s target, though it cautions that global tensions and trade uncertainty continue to influence price pressures.

Private investment grew by 0.7 per cent in the fourth quarter but was still down 1.2 per cent compared with a year earlier.

CFIB projects a 3.5 per cent rebound in the first quarter, though it describes that level as modest.

Payroll employment rose by one per cent in the fourth quarter, bringing total job growth for 2025 to 0.4 per cent.

Employment growth is expected to accelerate to 2.6 per cent in early 2026.

The report also highlights ongoing challenges for small firms. CFIB notes the private‑sector job vacancy rate held at 2.8 per cent in the fourth quarter, representing 387,600 unfilled positions.

A special analysis of business‑to‑business and business‑to‑consumer firms found that both groups have become less optimistic since early 2025, though B2C firms have recovered more quickly.

CFIB points to weak demand, labour shortages and distribution issues affecting B2B firms, while B2C firms are dealing with limited physical space.

The organization’s sectoral profile shows business closures have outnumbered new entries for more than a year.

CFIB reports the trend is most pronounced in transportation, wholesale, and finance and insurance. Only the health and education sector is consistently seeing more new businesses than closures.

Simon Gaudreault, CFIB’s chief economist and vice‑president of research, said the findings reflect both resilience and risk.

“Canada’s economy remains relatively resilient, but inflation dynamics still depend on ongoing geopolitical tensions and global trade uncertainty,” he said in the release.

Gaudreault added that private investment has struggled but is showing early signs of improvement.

“Private investment declined by 1.2 per cent year over year, and it’s encouraging to see it slightly rebounding,” he said.

Gaudreault explained that small firms are adapting, but he believes investment needs clearer conditions and stronger policy support to grow.

He also warned that business closures continue to outpace new entries.

“Canada’s economic pulse depends on a healthy private sector,” Gaudreault said.

“We can’t keep losing businesses without new ones entering the market. This is a wake‑up call for policymakers to create a stronger and more competitive economic environment.”

Retail sales fell by 1.7 per cent in the fourth quarter, marking the first decline after several quarters of slowing growth.

CFIB expects that drop to be temporary, with sales forecast to rebound by 4.6 per cent in the first quarter of 2026.

The organization notes that retail spending grew by an average of 3.8 per cent in 2025, supported by easing inflation.

CFIB Dan Kelly

Carbon tax rebates on their way to small businesses

The federal government is returning $623 million in carbon tax rebates to small businesses across Canada.

It’s good news for small businesses according to the Canadian Federation of Independent Business.

A release from the CFIB said 600,000 small businesses across eight provinces will receive the rebate.

“After another challenging year, small firms could really use this chunk of cash,” said CFIB president Dan Kelly.

Rebates will be based on the number of T4s issued by an employer. The Canada Revenue Agency will automatically issue rebates to eligible businesses in Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

“It is a relief that the government has cancelled this carbon tax and delivered on the final annual instalment to small firms,” Kelly said.

The next step, Kelly said, is calling on the federal government to pass legislation that ensures the rebates are tax-free and to deliver on a promise to extend the original filing deadline so more small businesses qualify.

Legislation to proceed with those changes is proposed in the 2025 budget.

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Fuel And Energy Costs Pose Challenges For Small Businesses In May

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The Canadian Federation of Independent Business says the general state of business is on the upswing, that according to a recent survey of members this month.

According to 54 per cent, labour shortages were the biggest factor limiting business growth in May, while fuel and energy prices continued to be the major cost constraint as reported by 76 per cent of businesses.

Forty-three per cent of businesses reported being in a good state.

Almost all provinces were more optimistic over the short-term, except Ontario where businesses saw the biggest decrease, and Quebec.

“It’s encouraging to see more businesses being in good health after the last two years of uncertainty. However, some businesses still have a long way to go, with certain sectors, such as retail and agriculture, feeling particularly less optimistic about the future,” said Andreea Bourgeois, Director of Economics at CFIB.

Small business confidence over the long and short terms has dropped slightly in May, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer. The 12-month outlook dropped by three index points to 61.6, while the three-month optimism index fell to 58.8, a loss of two points since April.

Full-time staffing plans are positive, with 30 per cent of businesses planning to hire in the next three months.

May findings are based on 708 responses from a random online sample of CFIB members. Responses were received from May 3 to 13.

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Trudeau Government Promises To Create 1 Million Jobs

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Governor General Julie Payette laid out a broad and ambitious plan for Canada’s economic recovery today as she opened a new session of parliament with a speech from the throne.

Payette, laying out Prime Minister Justin Trudeau’s new national agenda, said the Covid-19 pandemic “laid bare fundamental gaps in our society.”

Speaking about his government’s plan after Payette’s speech, Trudeau echoed Payette and said his government plans to repair Canada’s economy, bolstering social welfare programs and investing in the green economy.

“This pandemic has reminded us all that strong, social supports are essential to growing the economy,” Trudeau said.

In her throne speech, Payette outlined how the government hopes to do that, saying the prime minister won’t be afraid to spend money to make it happen.

“This is not the time for austerity,” Payette said. “Canadians should not have to choose between their health and their job” or “take on debt when the government can shoulder it.”

One of the major promises in the government’s plan is a pledge to create more than 1 million jobs and restore employment to its pre-pandemic levels.

Canada’s unemployment rate rose as high as 13.7 percent at the height of the pandemic and sat at 10.2 percent at the end of August. In February, before the pandemic, unemployment in Canada sat at 5.6 percent.

Payette said the government will use a “range of tools” to try and bring those jobs back, including direct investments in the social sector and infrastructure, “immediate” training to “scale up” workers, and incentives for employers to hire and retain workers.

The government will also support businesses by extending the Canada Emergency Wage Subsidy until next summer, expanding the Canada Emergency Business Account, and improving the business credit availability program.

Prior to Payette’s speech, the Canadian Federation for Independent Business called on the government to include these types of extensions in its economic recovery plan.

“I’m pleased today’s throne speech focuses on the continued economic response to Covid-19,” The CFIB’s Dan Kelley said in a statement after the speech. “Renewing the wage subsidy and expanding CEBA to cover fixed costs are both very positive measures.”

Kelly said, however, he is disappointed there are no signs the government will cancel Canadian Pension Plan hikes scheduled for January 1 and a hike in the federal carbon backstop in the spring.

In her speech, Payette also pledged new support for industries that have been hit hardest by the pandemic. She said support will be coming for travel, tourism, and performing arts sectors, but did not say specifically what that support would be.

The government’s recovery plan also acknowledges that women, particularly low-income women, have been “hit hardest by Covid-19.” Payette said the government does not want the pandemic to leave a legacy of “rolling back the clock” on women’s participation in the economy.

“No parent, especially no mother, should have to put their career on hold,” Trudeau said.

To combat the “she-cession” the government is promising to create an action plan to help bring women back into the workforce. The plan will draw on a “feminist intersectional response to this pandemic and recovery” and be guided by a task force of experts.

Payette said the government is also pledging to make “significant, long-term, sustained investment” to create a Canada-wide early learning and childcare system.

As part of its pledge to “build back better,” the government is also promising to “identify additional ways to tax extreme wealth inequality.”

Payette said measures could include limiting stock option deductions for the wealthy and addressing corporate tax avoidance by “digital giants”

“Web giants are taking Canadians’ money while imposing their own priorities. Things must change and will change,” she said.

She said the government will make sure revenue from those “tech giants” is “shared more fairly” with Canadian creators and media and that the companies are contributing to the production of Canadian content.

The government also wants to make Canada “the most competitive jurisdiction in the world for clean technology companies.”

It will do this through a new fund aimed at attracting investment into companies creating zero-emission products as well as a 50 percent corporate tax cut for clean technology companies.

Along with economic initiatives, the government’s plan made several major commitments to environmental protection.

Payette said climate action will be a “cornerstone” of the government’s plan to create 1 million jobs. She said the government will “immediately” bring forward a plan for Canada to exceed its 2030 climate goals and reaffirmed its commitment to get Canada to net zero emissions by 2050.

Payette also outlined several measures the government will take to help provinces test and track Covid-19, as well as several commitments to measures designed to help indigenous and racialized Canadians.

Trudeau acknowledged that his government’s plans will come with significant cost, and said questions about how the government will afford its plans are fair.

“Low-interest rates mean we can afford [this plan],” he said. “And, in fact, doing less would end up costing far more. Doing less would mean a slower recovery and bigger deficits in the long run.”

He said the government will “keep investing” to prevent Canadians from taking on debt, but said that investment must happen “in a fiscally sustainable way.”

Shortly after Payette’s speech, Lisa Raitt, the deputy leader of the Conservative Part of Canada, said she was “very concerned” with Trudeau’s plan and that her party would not support “another speech that is filled with Liberal buzzwords and grand gestures.”

“It doesn’t speak at all of national unity, it doesn’t speak of our energy sector and our workers in Alberta and Saskatchewan and Manitoba, it doesn’t talk about agriculture,” she said.

Raitt said her party is concerned the speech had no “fiscal framework” and said, “the only thing Canadians can be guaranteed of fiscally is that there will be more debt.”

She said the throne speech had “very little to no follow-up plan” and accused the Prime Minister of proroguing parliament simply to escape scrutiny.

Trevor Nichols is a Reporter with Huddle Today, an Acadia Broadcasting content sharing partner.