A quarterly report from the Canadian Federation of Independent Business forecasts slow economic growth and receding inflation — all signs that the country may sidestep a recession.
The last quarter of 2022 is expected to see 1.2 per cent annualized growth with another 0.6 per cent annualized growth in the first quarter of this year, according to the CFIB’s the latest Main Street Quarterly.
The group also forecasts inflation, excluding food and energy, to fall back in Q1 2023 and sit at 5.7 per cent, and 5 per cent on a year-over-year basis, respectively.
So while the economy is slow, there isn’t a contraction so a recession should be avoidable, said Simon Gaudreault, chief economist and vice-president of research at CFIB.
“Moreover, 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,” he added.
On the jobs front, the vacancy rate has declined but stayed high at the end of last year. CFIB reported the national private sector job vacancy rate declined slightly in the fourth quarter to 4.8 per cent and 665,500 jobs went unfilled.
“It’s too early to tell whether the labour market is at a turning point as we continue to hear from employers how tough it is to hire and retain workers these days,” said Andreea Bourgeois, director of economics at CFIB. “A small business experiencing vacancies means it doesn’t have the capacity to run smoothly, grow or expand due to lack of staff. When employers don’t have enough workers, they have to work more hours or give up sales or contracts because they can’t meet demand on their own.”