Quebec Business Trends January 2026 – Post Holiday Hesitation
With the holiday period behind us, some contacts reported sales to be lackluster. Businesses hesitate to increase production, while suppliers delay in building their inventory as there is a lack of confidence on what prices and demand will be like in the coming months. Some report better activity for green than for kiln-dried markets. Contacts note that orders are related to length specific options for Basswood, Birch, Hard Maple, White Oak and Ash.
Ash demand is meeting the green and kiln-dried supplies, with prices stable. Basswood markets are slow, with order files thin, as such production is limited and is being sold to established customers.
Aspen business is seen as slow or challenging, with many avoiding the species. Those involved in its sales are providing positive feedback, although they agree it is scarce, which appears to be the main reason sales are decent for those offering it.
Demand for the regionally important species Hard Maple is stronger for No. 1 Common than for FAS grade, with longer lengths moving easier than 8-foot lengths. Production had increased in October 2025, and green markets absorbed this additional output. However, kiln-dried supplies, it was noted, had been in excess of market needs. Supply and demand are now in balance. Soft Maple is the best seller of species at present. Sales were reported as brisk to the U.S. border states. No. 1 Common is also the grade that sells the most. However, the upper grades of Soft Maple are performing better than Hard Maple.
Birch is not doing well on markets, with much difficulty in moving it. While demand for Birch is not good, it is still on the market. There is some ongoing business with established suppliers and customers. Prices vary widely based on color, length and other specifications.
Cherry demand on markets is slow, and some contacts identify this species as their worst seller.
Depending on regions contacted, Hickory demand and availability vary across the region. Kiln-dried supplies sometimes outweigh demand. Green Hickory is reported as being in short supply for those who are seeking more of it.
Red Oak prices for kiln-dried products stabilized following some erosion earlier last fall. With the low production, there has been decent domestic sales and steady shipments to secondary export markets. China’s interest has improved for more Red Oak.
White Oak production has improved on domestic markets. With reduced consumption by the barrel stave industry, more White Oak logs have found their way to sawmills. Demand on the domestic front is steady, with decent exports as well.
Poplar demand is steady, noted contacts, although certain grades sell better than others. Log decks were noted as sparse, causing green lumber being challenging to find. Inventories and production are manageable, however.
Demand for Walnut is aligned with production for most grades and thicknesses on both domestic and international markets.
The Bank of Canada reduced its target for the overnight rate to 2.25 percent, with the Bank Rate at 2.5 percent on October 29, 2025. The Bank said in its press release, with somewhat clearer effects of U.S. trade actions on economic growth and inflation, the Bank returned to its usual practice of providing a projection for the global and Canadian economies in its Monetary Policy Report (MPR). Because U.S. trade policy remained unpredictable and uncertainty still higher than normal, the projection was subject to a wider-than-usual range of risks.
While the global economy has been resilient to the historic rise in U.S. tariffs, the impact is becoming more evident. Trade relationships are being reconfigured and ongoing trade tensions are dampening investment in many countries, continues the press release. The MPR projects the global economy slows from about 3.25 percent in 2025 to about three percent in 2026 and 2027.
Canada’s economy contracted by 1.6 percent in the second quarter, reflecting a drop in exports and weak business investment amid increased uncertainty. Meanwhile, household spending grew at a healthy pace. U.S. trade actions and related uncertainty are having severe effects on targeted sectors including autos, steel, aluminum and lumber. As a result, GDP growth is expected to be weak in the second half of 2025. Growth will see some support from rising consumer and government spending and residential investment and then pick up gradually as exports and business investment begin to recover.
Canada’s labor market remains soft. Employment gains in September followed two months of sizeable losses. Job losses continue to build in trade-sensitive sectors and hiring has been weak across the economy. The unemployment rate remained at 7.1 percent in September and wage growth slowed. Slower population growth means fewer new jobs are needed to keep the employment rate steady.
The Bank projects GDP will grow by 1.2 percent in 2025, 1.1 percent in 2026 and 1.6 percent in 2027. On a quarterly basis, growth strengthens in 2026 after a weak second half of this year. Excess capacity in the economy is expected to persist and be taken up gradually.
Consumer Price Index (CPI) inflation was 2.4 percent in September, slightly higher than the Bank anticipated. Inflation excluding taxes was 2.9 percent. The Bank’s preferred measures of core inflation have been sticky around three percent. Expanding the range of indicators to include alternative measures of core inflation and the distribution of price changes among CPI components suggests underlying inflation remains around 2.5 percent. The Bank expects inflationary pressures to ease in the months ahead and CPI inflation to remain near two percent over the projection horizon.
If inflation and economic activity evolve broadly in line with the October projection, the Governing Council sees the current policy rate at about the right level to keep inflation close to two percent while helping the economy through this period of structural adjustment. If the outlook changes, they are prepared to respond. The Governing Council will be assessing incoming data carefully relative to the Bank’s forecast.
The Canadian economy faces a difficult transition, continued the press release.
The structural damage caused by the trade conflict reduces the capacity of the economy and adds costs. This limits the role that monetary policy can play to boost demand while maintaining low inflation. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.
At time of writing, the next scheduled announcement for the overnight rate target was December 10, 2025. The Bank’s next MPR will be released on January 28, 2026.
We wish you and yours a happy, healthy and prosperous New Year.
