After falling nearly flat in Q2 2023, economic growth is expected to see a slow rebound to 1.4 per cent in Q3 2023, according to the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB).
But the national organization said there is no recession in sight for the short term.
CPI inflation, both total and excluding food and energy, is expected to continue its downward trend, reaching 3.3 per cent and 3.7 per cent in Q2 and 2.4 per cent and 2.6 per cent in Q3, respectively, said the CFIB report.
Simon Gaudreault
“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.
The CFIB said private investment continued to decline in Q2, with a contraction of 1.7 per cent and the slowdown was due to lower business sentiment, elevated expectations regarding wage increases, as well as fewer unfilled orders compared to the beginning of the year. Business investment should renew with growth in Q3 but remain lower than a year ago, it added.
Employment growth turned negative at -1.0 per cent in Q2 2023, mainly because of the federal workers’ strike. A rebound is expected in Q3 2023, although the growth rate should be more moderate than a year ago, said the report.
The report said national job vacancy rate maintained its elevated trend in Q2, declining just 0.1 per cent to 4.6 per cent. This represents 656,900 unfilled positions. Businesses in Quebec (5.3 per cent) and New Brunswick (5.1 per cent), as well as those in the personal services (7.5 per cent), construction (6.5 per cent) and hospitality (5.8 per cent) sectors, had the highest vacancy rates.
“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.
“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.
Read the full Main Street Quarterly here.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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