Canadian Economy to Remain Sluggish in Q1 2024: Report

The Canadian economy is expected to slowly grow in the first quarter of 2024, after having been more or less stuck in neutral since October.

This is according to the latest report by the Canadian Federation of Independent Business (CFIB), this country’s largest association of small and medium-sized businesses.

Inflation receded to 3.2 per cent in Q4, and is expected to be stable in Q1 2024.

On the job front, the national vacancy rate also continued to decrease, with a slight drop to 3.7 per cent in the last three months of 2023. This represents 523,000 unfilled positions.

Most businesses are still considering increasing prices this year. However, the average price hike is expected to be lower than in previous post-pandemic years at 3.1 per cent, and fewer companies will be increasing prices than in previous years.

A special look at manufacturing businesses reveals their optimism over the short and long-term has been declining rapidly for the past two quarters. An increasing share of manufacturers also report insufficient domestic and foreign demand.

“Current forecasts point to a short-lived contraction of the overall economy, with a return to positive growth in early 2024,” said CFIB chief economist and vice-president of research Simon Gaudreault in a statement. “(But) a real recovery for the small business sector should arrive much later given the enduring poor business environment.”

Private investment plans are at their lowest level ever, having severely dropped by 12 per cent in Q4 2023, compared to Q3. This is mainly driven by very low long-term small business confidence. Business owners who are feeling pessimistic about their future due to general uncertainty, various cost pressures and tax increases are significantly less likely to invest in their business.

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