Canadian economy in for slow rebound: CFIB
The Canadian Federation of Independent Business’ (CFIB) latest Main Street Quarterly report predicts a sluggish economic growth in Q2 2023, followed by a gradual recovery to 1.4 per cent in Q3 2023. Fortunately, there are no signs of a recession in the near future.
As for CPI inflation, it is anticipated to decline further. In Q2, total CPI inflation is projected to reach 3.3 per cent, with food and energy excluded at 3.7 per cent. In Q3, these figures are expected to decrease to 2.4 per cent for total CPI inflation and 2.6 per cent for inflation excluding food and energy.
“Key macroeconomic indicators, such as GDP, retail sales and inflation, appear to be moderating. We forecast that Q3 inflation, both total and core, will be within or likely very close to the Bank of Canada’s inflation-control target range of one to three per cent,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research.
According to the report, private investment experienced a further downturn in Q2, declining by 1.7 per cent. This contraction was driven by diminished business sentiment, heightened wage increase expectations, and a decrease in unfilled orders compared to earlier in the year. Although business investment is predicted to pick up in Q3, it is anticipated to remain below the levels seen a year ago.
As for employment growth, it experienced a negative trend of -1.0 per cent in Q2 2023, primarily due to the federal workers’ strike. However, a rebound is expected in Q3 2023, albeit with a more moderate growth rate compared to the previous year.
During Q2, the national job vacancy rate remained at a heightened level, showing only a marginal decrease of 0.1 per cent to reach 4.6 per cent. This translates to a total of 656,900 unfilled job positions across the country. Notably, Quebec (5.3 per cent) and New Brunswick (5.1 per cent) exhibited the highest vacancy rates among provinces, while the personal services (7.5 per cent), construction (6.5 per cent), and hospitality (5.8 per cent) sectors stood out with the most significant job vacancies.
“We’re not seeing much change quarter-over-quarter and vacancy rates remain well above previous historical peaks, but on the year-over-year comparison, we can see some easing in labour markets,” said Laure-Anna Bomal, CFIB economist.
In this quarter’s report, there are other sections that delve into the construction sector and conduct a comparative analysis of businesses facing the highest risk of closure in relation to the overall business sector.
“High borrowing, insurance and wage costs, are already affecting the construction industry more than other sectors. Last week’s Bank of Canada interest rate increase is likely not going to be alleviating that pressure any time soon,” said Andreea Bourgeois, director of economics.