The Canadian Federation of Independent Business (CFIB) has published its quarterly economic report, the Main Street Quarterly, which forecasts slowing economic conditions in the first quarter of 2023, but also calls for inflation to recede somewhat.
The Canadian economy is forecast to have grown at just 1.2 per cent in the last quarter of 2022 and will likely grow just 0.6 per cent in early 2023, according to the report. It is also calling for consumer price index (CPI) inflation to pull back to 5.7 per cent, year-over-year, or five per cent year-over-year, excluding food and energy.
“While inflation is absolutely not back to normal yet, our analysis suggests it will continue significantly cooling over the current quarter, which should help the Bank of Canada as it decides whether or not to keep raising interest rates,” says the CFIB’s chief economist and vice president of research, Simon Gaudreault. “It’s crucial for policy makers to show strong support for small businesses and help create the conditions that enable them to hire and invest.”
The report also looks at job vacancy rates – these are expected to decline but remain high – and at the measures small and medium sized businesses have at their disposal to address vacancy rates, including wage increases and technological investment.
Job vacancies are not being felt uniformly, they write. “At 7.3 per cent, the vacancy rate for microbusinesses is still much higher than the rate of 3.8 per cent for firms of larger sizes,” they state. “Businesses with at least one vacancy are still planning on higher wage increases compared to firms without any vacancies,” but they add that the planned increases for both business types actually decreased slightly when compared to the previous quarter.
