Canadian Design and Construction Report staff writer
Labour shortages in construction and personal services are adding pressure to an already slowing economy, according to a new report from the Canadian Federation of Independent Business (CFIB).
The CFIB’s Main Street Quarterly shows that job vacancy rates in construction hit 3.8 per cent in early 2025, among the highest across all sectors. Small businesses, especially those with fewer than five employees, are feeling the squeeze — their vacancy rates are more than triple those of larger firms.
These hiring challenges come at a tough time. Canada’s GDP grew by just 0.8 per cent in the first quarter of the year, and a sharp 5.6 per cent contraction is expected in the second quarter.
The slowdown is being driven by weak business confidence and ongoing trade tensions with the U.S. As tariffs drive up costs, many small and medium-sized businesses are holding back on investment and hiring.
Retail sales spiked at the end of 2024, up more than 10 per cent in dollar terms. But most of that came from higher prices, not an increase in shoppers. Sales are expected to fall by 2.3 per cent this spring.
Inflation is on the rise again, hitting 2.4 per cent in the first quarter and expected to climb to 2.7 per cent. The increase is tied to the end of the GST/HST tax break and the ripple effects of tariffs. The Bank of Canada will have to decide whether to raise interest rates or hold off.
Private investment, which surged late last year, has since plummeted. It fell nearly 14 per cent in the first quarter and could drop another 19 per cent in Q2 as uncertainty makes businesses cautious about spending.
Employment grew slightly in early 2025, but a major dip is on the horizon. The report projects a 3.8 per cent drop in payroll employment in the second quarter, in line with the overall economic decline.
The CFIB is urging governments to act, especially to support small businesses struggling with rising costs and staffing shortages. As conditions continue to shift, the group says it will keep tracking key indicators and sharing updates.
For additional information and detailed data, refer to the full CFIB report here: CFIB Main Street Quarterly Q1 2025.
