A new small business forecast is predicted a cooldown of the economy going into the end of the year.
A new report from the Canadian Federation of Independent Business (CFIB) found that total GDP grew by just 0.3 per cent in the third quarter of 2022. In Q4, a slight rebound of 1.9 per cent is expected. A “good” GDP growth rate is between 2.5 and 3.5 per cent.
It also noted that job vacancies are high but the rate has started to come down, albeit slightly to 4.9 per cent, down from 5 per cent. CFIB reported there are 660,000 jobs going unfulfilled for at least four months.
“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,” said Laure-Anna Bomal, CFIB research analyst.
The report also found that businesses with at least one job vacancy were planning to increase wages by almost 4 per cent in the next 12 months. Those without vacancies were planning a hike of 2.5 per cent.
Small businesses are still feeling financial stress from the COVID-19 pandemic. That that took on debt owe an average of almost $144,000. CFIB reported that 65 per cent of small firms took on federal government loans, while 24 per cent used credit cards and 23 per cent used lines of credit to make it through the pandemic. On average, it noted, 40 per cent of small businesses have not yet repaid any of their pandemic-related debt.
“The recovery is still far from a done deal for too many small businesses,” said Simon Gaudreault, chief economist and vice president of research at CFIB.