Canadian Economic Update Report
Whitehorn Capital's Canadian Economic Update presents performance trends, economic drivers, and transaction activity observed during the past quarter nationwide, with a focus on Western Canada.
Public Market Dashboard
Year to date as of September 30, 2026.
Macroeconomic Updates
The following sections cover key macroeconomic drivers for Canadian business owners and leaders.
- National Stabilization: Canada's national unemployment rate held steady at 6.4% in August 2026. The economy shed 42,000 jobs month-over-month, with the job losses predominantly in full-time and public sector positions. Annual hourly wage growth cooled to 2.0% (2.8% in July).
- Western Canadian Variance: Alberta continues to hold the highest unemployment rate in Western Canada at 6.8% (7.0% in July), driven by sustained labor force growth. BC's unemployment edged higher from 6.2% in July to 6.5% in August. On the other end, Manitoba maintains the tightest regional labor market at 5.0%.
- What This Means for You: Slower wage growth and a larger pool of job seekers in AB and BC have led to a relatively stable labour market today. August's numbers point to businesses cutting fixed overhead as well, shifting focus toward part-time / contract talent.
Expect Alberta unemployment to drop toward 6.0% in 2027. With strong energy exports, major infrastructure projects, and steady population growth, we expect Alberta to have one of the fastest-growing provincial economies in Canada.
- Energy Driving Headline Figures: Headline CPI reached 3.0% in August 2026, largely pushed up by higher energy costs and volatility in international oil and gas markets.
- Core Prices Staying Flat: CPI excluding energy held at 2.4% in August. After bottoming out at 2.0% in April, core inflation has edged back up over the summer, showing that underlying price pressure is sticky rather than cooling off.
- Interest Rate Pressures: With the US Federal Reserve back to raising rates to fight sticky inflation, markets are buzzing that the Bank of Canada may soon follow suit and hike rates to protect the Loonie and keep inflation in check.
- What This Means for You: Higher interest rates will keep borrowing costs tight for business growth and refinancing. At the same time, potential trade tariff threats from the US could bump up landed equipment costs, making disciplined cash flow and supply chain hedging essential for 2027.
While tariff pressures threaten to push up input costs, tightening interest rates will force consumer demand to cool. This tug-of-war will likely lock headline inflation in a sticky 2.4% to 2.8% range through 2027, keeping borrowing costs elevated while squeezing corporate profit margins.
- Where the Money Is Going: Recent spending growth is mostly coming from essentials like groceries, pharmacy items, and auto repairs. Non-essential purchases like clothes, electronics, and home furnishings remain flat as shoppers stay cautious.
- Higher Prices vs. Actual Sales Volume: While total sales dollars look solid (+5.6% YoY), actual merchandise moving off shelves is growing much slower (+2.1% YoY). Most of the growth comes from higher prices rather than people purchasing.
- What This Means for Business Leaders: Customers are carefully watching their spending. Focus on keeping inventory tight, protecting profit margins, and offering clear value to keep shoppers engaged.
Retail sales in 2027 will depend on how quickly the Bank of Canada adjusts interest rates. If rates stay steady or increase slowly, consumer spending should remain stable; a faster series of rate hikes would likely cause shoppers to pull back on bigger purchases.
- Market Rebound in Q2 2026: Total Western Canadian housing starts rebounded significantly to 29,105 units in Q2 2026, up nearly 30% from Q1 levels, driven by seasonal acceleration and strong multi-family project momentum.
- Alberta Leads Regional Activity: Alberta continues to be the primary engine of Western Canadian residential construction, accounting for over 44% of total regional starts in Q2 2026 due to strong interprovincial migration and relative housing affordability.
- British Columbia Stabilization: BC home starts showed a modest recovery in Q2 2026 to 11,108 units following three consecutive quarters of contraction, though high borrowing costs and slower population growth remain headwinds.
- Saskatchewan & Manitoba Gains: Saskatchewan and Manitoba recorded solid year-over-year Q2 gains, reaching 2,302 and 2,759 starts respectively, supported by steady local economic performance and low multi-family inventory.
Housing starts will moderate in 2027 as builders focus on completing pipeline projects amid high financing costs and softening presales. While Alberta will continue to lead regional activity, construction and trade service businesses should prepare for tighter project margins and longer sales cycles.
Write it off.All of it.
Ottawa is proposing a tax change called the Productivity Mega Deduction. It would change how quickly you can deduct the cost of new equipment: instead of claiming a bit each year for a decade, you would claim the whole thing in year one. Here is what it would mean for your business.
Not to be confused with the Productivity Super-Deduction, the narrower measure from Budget 2025. The Mega Deduction is the bigger one, and it replaces most of what the Super-Deduction did.
What you could write off in year one on a $1 million machine
General equipment, first taxation year
Example uses general equipment written down at 20% a year. The figure for your own purchase depends on the type of asset. Confirm it with your accountant.
The short version
When you buy equipment today, you write off a portion of the cost each year over many years. Under the proposal you would write off the entire cost in the year you start using it, so your tax bill drops sharply in the year you invest.
Prime Minister Carney announced the Productivity Mega Deduction on 15 September 2026 and the Department of Finance released draft legislation the same day. It is not law yet.
You would not get more. You would get it sooner.
This is the part people misread. You always got to deduct the full cost of a machine eventually. What changes is the timing, and in a business, cash today is worth considerably more than the same cash spread over ten years.
Share of business purchases that would qualify for a full first-year write-off
Before the change, and under the proposal
Source: Department of Finance Canada backgrounder, 15 September 2026.
What qualifies
Most things a business buys would be covered. The exclusions are the shorter list.
Write it off in full
- Machinery and equipment
- Software and computers
- Vehicles, trucks and trailers
- Oil and gas pipelines
- Mining property
- Fibre-optic cable and data networks
- Aircraft, rail track, bridges and roads
- Patents and research spending
Written off slowly, as before
- Buildings
- Goodwill and licences when you buy a business
- Natural gas pipelines running into homes
- Passenger cars, taxis, and rental or leased vehicles, unless the vehicle is new and was assembled in Canada
- Quarries, and timber and cutting rights
Eligibility is set by the tax category an asset falls into, not by what you call it. Two similar-looking purchases can land on opposite sides of this line, so check each one.
Three details that matter out west
Where the general rule has a specific exception
-
01
Not every pipeline is treated the samePipelines carrying oil and gas would qualify. The regulated gas lines that run into homes would not.
-
02
For cars, where it was built decides itWork vehicles generally qualify. Passenger cars, taxis and rental or leased vehicles do not, unless the vehicle is new and was assembled in Canada.
-
03
LNG has its own rule, backdated furtherLiquefaction equipment would be covered from 4 November 2025, earlier than everything else, but the deduction could only be claimed against income from liquefaction at that facility.
What it is worth
Take a company buying a $1 million machine that goes into service this year. British Columbia, Saskatchewan and Manitoba all tax general business income at the same combined rate, so they are shown together. Alberta is lower.
First-year tax saved on a $1 million machine
Combined federal and provincial rates on general business income, 2026
23% combined rate
27% combined rate
Swipe to see both
Illustrative. Assumes the business has enough taxable profit to use the full deduction, and general equipment written down at 20% a year. Saskatchewan taxes manufacturing and processing income at a lower combined rate of 25%, so a Saskatchewan manufacturer would save about $250,000 rather than $270,000. Income taxed at the small business rate produces a smaller saving. Provinces must also adopt the federal change for the provincial share to apply.
Select Merger & Acquisition Transactions
Notable Western Canadian transactions this past quarter.
| Date | Acquirer | Acquirer HQ | Target | Target HQ | Sector |
|---|---|---|---|---|---|
| July 2026 | Collective Waste Solutions | Calgary, AB | City Disposal and City Ecobag | Edmonton, AB | Industrial |
| Acquisition of front load, roll-off and bin collection services provider as well as fencing and construction waste bulk bag services to expand commercial and construction services platform in Edmonton. | |||||
| July 2026 | Service Logic Holdings Canada | Various | Custom Air Conditioning | Port Coquitlam, BC | HVAC |
| Acquisition of majority interest in commercial mechanical services (HVAC/R, plumbing and electrical services) provider across 4 locations from CAI Capital Partners. | |||||
| July 2026 | NordSpace | Markham, ON | North Vector Dynamics | Calgary, AB | Defence |
| Strategic investment in defence and autonomy company supporting high speed and hypersonic aeropropulsion technologies used for missiles or space launches. | |||||
| July 2026 | Allied Universal | Irvine, CA | SSC Security Services | Regina, SK | Commercial services |
| Acquisition of public holding company investing in physical, electronic and cybersecurity businesses. | |||||
| Aug. 2026 | DXP Enterprises (NASDAQ:DXPE) | Houston, TX | Mequipco | Calgary, AB | Distribution |
| Acquisition of mechanical equipment used in water and wastewater systems manufacturer representative for municipal and industrial applications with three locations generating $9.9MM EBITDA to scale Canadian water business. | |||||
| Aug. 2026 | Trimac Transportation | Calgary, AB | California Freight Sales | Ripon, CA | Logistics |
| Acquisition of food-grade bulk logistics providers operating eight truck terminals, a warehousing terminal and brokerage facility across CA and NV to expand bulk food-grade logistics capabilities. | |||||
| Aug. 2026 | Exchange Income (TSX:EIF) | Winnipeg, MB | TerraPro | Sherwood Park, AB | Environmental services |
| $30MM acquisition of provider of access, rig and crane mats, terrain protection, civil construction, reclamation, remediation and recycling services. | |||||
| Sep. 2026 | AutoCanada (TSX:ACQ) | Edmonton, AB | Doug's Place Southgate | Edmonton, AB | Commercial services |
| Acquisition of collision repair business with 7,540 sq ft of capacity to enhance efficiency and to add capacity to existing footprint. | |||||
| Sep. 2026 | HMFT | Ajax, ON | Canadian Industrial Pumps | Surrey, BC | Distribution |
| Acquisition of fluid handling equipment distributor and services provider to strengthen pump portfolio and technical depth. | |||||
| Sep. 2026 | Central Builders' Supply | Courtenay, BC | Lumberworld Operations | Victoria, BC | Distribution |
| Acquisition of building materials and construction products supplier to strengthen Vancouver Island's market presence. | |||||
| Sep. 2026 | Highfield Investment Group | Calgary, AB | Century Mile Racetrack and Casino and Century Downs Racetrack and Casino | Alberta | Consumer discretionary |
| $23.2MM acquisition of the racing and gaming operations of Edmonton and Calgary based entertainment centres from Century Casinos (NASDAQ:CNTY) at a 6.1x FY2025 EBITDA multiple. | |||||
| Sep. 2026 | Grindr (NYSE:GRND) | West Hollywood, CA | PurposeMed | Calgary, AB | Healthcare services |
| US$250MM acquisition of secured virtual care platform connecting healthcare providers with patients nationwide including Freddie and Affirming Care Pharmacy. | |||||
Whitehorn Capital Q3 2026 Canadian M&A Tracker
Merger and acquisition activity with a Canadian acquirer or target, announced between 1 July and 30 September 2026. Filter by sector, province, month or direction of capital, and select any transaction to read the detail.
Transactions by sector
Select a sector to filter the table below.
Direction of capital
Domestic deals have a Canadian acquirer and target. Inbound means a foreign acquirer of a Canadian business; outbound means a Canadian acquirer abroad.
Compiled by Whitehorn Capital as of September 30, 2026, from public announcements and transaction databases. Provided for information only and believed accurate at the time of publication.
