Canadian Economy Cooling Down

Dariya Baiguzhiyeva

Total GDP grew by a mere 0.3% in Q3 2022, dampened by low business sentiment. However, a rebound is anticipated over Q4 (+1.9%), according to a new report by the Canadian Federation of Independent Business (CFIB). Retail sales also declined in Q3 2022, with a growth rate of -0.6%; while some improvement should be seen in Q4, growth will remain below average and likely negative in real terms. 

CFIB and consulting firm AppEco have partnered to develop early short-term economic forecasts of some key macroeconomic indicators, leveraging the timeliness of CFIB’s Your Business Outlook survey, the same survey used to create CFIB’s Monthly Business Barometer®.

“CFIB is now providing key information on the state of the Canadian economy in real-time from a small business perspective, in addition to making short-term forecasts,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. “This should serve as a useful tool for policy-makers and financial institutions in making decisions that impact small businesses.”

The private sector continued to see high job vacancy rates (4.9%) in the third quarter of 2022, with more than 660,000 jobs going unfilled for at least four months. 

“After reaching new highs in previous quarters, private sector job vacancies saw a small decline but remained bullish in Q3, with Quebec, Saskatchewan and British Columbia showing the highest vacancy rates,” said Laure-Anna Bomal, CFIB research analyst. “Although this quarter’s drop in the vacancy rate is the first in many quarters, several other indicators are still showing historical labour market tightness; therefore, it is too soon to conclude we have turned the corner.”

To survive the pandemic, 65% of small firms resorted to federal government loans, while 24% used credit cards and 23% used lines of credit. On average, 40% of small businesses have not yet repaid any of their pandemic-related debt. Moreover, 55% of small businesses report that their financial situation, including debts due to the pandemic, poses a significant challenge.

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