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Sep 09, 2022

Labour Force Survey for August 2022: Slowing down

After three straight months of falling employment, Canada’s red hot labour market has started to cool off.

Stephen Tapp, Chief Economist, Canadian Chamber of Commerce

KEY TAKEAWAYS

  • Canadian employment fell by 40,000 jobs (-0.2%) in August — worse than the modest gain the market expected (+5k to +15k). This is the third consecutive monthly drop, which brings the cumulative decline to 114k net jobs (-0.6%) since May, which have been primarily full-time jobs.
  • Total hours worked were unchanged (after falling 0.5% in July), though they remain up a healthy 3.7% year-over-year.
  • The unemployment rate, which had been on a steady downward track to new record lows, increased significantly (to 5.4%, up 0.5 percentage points).
  • Employment losses in August were concentrated in full-time jobs (-77k, as part-time employment rose 38k), and in education (-50k, -3.3%, although perhaps we should view this result with caution until we get September data, given that the timing of school contracts changes from year-to-year) and construction (-28k, -1.8%). “Other” and professional services continued to make gains. By gender, employment was down for both women (-23k) and men (-17k).
  • Despite the recent slowdown in employment, labour markets remain tight. With employers looking to fill over one million job vacancies, and inflation near generational highs, wage growth accelerated to 5.4% year-over-year (up from 5.2%). Wages for non-unionized workers are up more (6.3%) than for the unionized (3.6%), where gains for the latter may be delayed until collective agreements expire and are renegotiated.
  • Retirements are creeping up among baby boomers (307k annualized in August 2022, compared with 273k in August 2019). StatCan estimates that population aging reduced Canada’s labour force by 374k over this three-year period!
  • Provincial employment fell in BC, Manitoba, Nova Scotia, but was up in Quebec. Moves in other provinces didn’t exceed the survey margin of error.
  • In August, more than 1-in-4 workers were either fully remote (17%) or hybrid (9%).

SUMMARY TABLES

For more economic analysis and insights, visit our Business Data Lab.

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Sep 07, 2022

September Bank of Canada Interest Rate Hike

With today’s 75 basis point rate hike, the Bank of Canada fulfilled market expectations by shifting its policy rate above the 3% threshold into restrictive territory. If the Bank was previously watering down the punch, today they finally removed the punch bowl from the raging inflation “party”.

Headline consumer inflation has peaked, thanks to falling oil prices, but core and services prices are still rising, as are wages in a tight labour market. GDP growth will slow in the second half of 2022, but with inflation likely to exceed 7% for the year, there’s a long way to go before inflation falls back near the Bank’s 2% target

Expect another hike in October, of 25 or even 50 bps.

Stephen Tapp, Chief Economist, Canadian Chamber of Commerce
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Aug 16, 2022

July 2022 Consumer Price Index data: Canada’s inflation finally turns a corner with falling gas prices, but core pressures remain

Canada’s headline inflation finally showed signs of cooling, with total CPI slowing to 7.6% year-over-year in July. Gas prices continued to be a main driver — this month on the downside — but broader-based “core” inflation measures continued to rise, which means the Bank of Canada will continue to raise interest rates.

Stephen Tapp, Chief Economist

KEY TAKEAWAYS

  • After an uncomfortably long and painful run, growth in Canada’s headline Consumer Price Index (CPI) inflation finally began to slow in July — falling to 7.6% year-over-year, down from its peak of 8.1% one month earlier. Much like in U.S. data, the summer slowdown is largely due to falling energy prices, as consumers enjoyed some relief from lower gas prices in the last two months.
  • The inflation story continues to be written by dramatic price movements in a number of industries. Energy (28%, with gas prices up 36% year-over-year, despite their drop in July); transportation (+14%, passenger vehicle prices up 8%); and food (9.2%, with groceries up 10%). Shelter costs slowed (7.0%), reflecting the cooling of Canada’s housing markets, as interest rates rise to rein in inflation.
  • Price increases for goods have also come down (still running at 9.6%). Services inflation accelerated to 5.7% (hotels 48%, airfares 26%). This is related to the summer travel boom to make up for lost time during the pandemic.
  • The rate of inflation fell in eight provinces (BC and Saskatchewan being exceptions). It remains highest in PEI (9.5%) and lowest in Newfoundland and Labrador (6.9%).
  • Notably, the average of the Bank of Canada’s “core inflation” measures rose to 5.3%. This will be a cause for concern for the central bank, suggesting that underlying price pressures are still strong.
  • Over the pandemic, Canadian inflation has run at an average annual rate of 4.6% — terrible to be sure, but not quite as bad as the 5.8% in the United States.
  • Looking ahead, gas prices have declined steadily since mid-June (from a peak of almost $2.15 per litre nationally to $1.75. It represents a drop from 50% year-over-year price gains in June to “only” about 25% so far in August). This inflation driver should continue to drag down the overall headline figure.
  • More generally, in the months ahead, momentum in inflation should decelerate further due to falling energy prices, but also slower global growth, a deflating domestic housing market and positive “base effects” (i.e., comparing 2022 inflation readings with price levels that rebounded in the Spring of 2021.)
  • Looking ahead, there is still likely a long way to go before inflation returns to pre-pandemic levels of 2%. The Bank of Canada’s July Monetary Policy Report forecasts CPI inflation of 7.2% in 2022, 4.6% in 2023, and 2.3% in 2024, essentially accepting a major overshoot in prices.
  • As such, despite inflation’s belated positive turn, with core prices still rising, there is a strong case for the Bank of Canada to continue raising interest rates. The Bank’s nominal policy rate is finally back at a level which is considered “neutral” (2.5%). With inflation at 7.6%, the “real” policy rate is around -5% (still excessively stimulative). Longer-term inflation expectations are creeping up, and labour markets are as tight as at any point in recent history. To address this, the Bank’s policy rate will likely need to exceed the rate of inflation. This will come through a combination of rising interest rates and falling inflation, which entails sharply slowing demand growth, as supply continues to recover from the pandemic.

We are currently pencilling in a 50 basis point rate hike from the Bank of Canada in September. Additional hikes will continue, albeit at a slower pace, until core inflation shows continued and significant improvements, and/or the global economy materially falters.

SUMMARY TABLES

For more economic analysis and insights, visit our Business Data Lab.

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Aug 11, 2022

Labour Force Survey for July 2022: Historic and unprecedented low unemployment remains, wage pressures continue to mount

July’s Labour Force data is both unexpected and unprecedented, with Canada’s unemployment rate remaining at a multi-decade low of 4.9% for a second consecutive month. Wage growth also continued at June’s torrid pace, with average hourly wages up 5.2% year-over-year.

While good news for employees and job seekers, for businesses that are already navigating the pressures of inflation and increasing demand, rising compensation and competition for labour in a heated job market will continue to be a challenge.

Marwa Abdou, Senior Research Director, Business Data Lab

Key Takeaways

  • The unemployment rate remains at 4.9% for the second consecutive month. This is a record low since the monthly data began in 1976.
  • After returning to its pre-pandemic level for the first time in June, July marked the third consecutive decline in long-term unemployment which dropped 23K (-12.2%) to162,000.
  • July experienced a decline of nearly 31K jobs, bringing the total loss of jobs since May to 74K.
  • The decline in jobs appears to be slowing down, but some sectors continue to feel it more acutely than others. Employment among public sector employees fell by 51K (-1.2%) in July, the first decline in the sector in 12 months.
  • In the services sector, employment fell by 53K, specifically wholesale and retail trade, health care and social assistance, and educational services. Conversely, there was a gain of net new positions of about 23K in the goods sector.
  • Hours worked (on a monthly basis) declined by 0.5%. This is the third decline to hit 1.5% below the Q1 2022 peak in March. Persistent shortage of workers and lags in productivity will demand businesses rethink and retool existing jobs to maintain their bottom line and meet consumer demand.
  • Average hourly wages of employees increased by 5.2%, matching the pace of previous months’ wage growth. While this is still below inflation, it increases the chance of a wage-price spiral that would further lift inflation above the Bank of Canada’s target.
  • Labour force participation decreased 0.2 percentage points to 64.7% following a 0.4 percentage point drop in June. The core-age labour force participation rate was 87.9% in July, well below the record high of 88.6% in March 2022.
  • The labour market remains exceptionally tight with low unemployment-to-job-vacancy ratio – building up steadily prior to the pandemic. The not-so-great news is we are seeing it affect health care more severely despite increased labour demand in the industry. The good news is, on the whole, there is little warning that there is an increase in the rate at which people are changing jobs or changing employment status.
  • All in all, July’s data were well below the consensus projections and will likely have an impact on GDP figures for Q3 2022.

Summary Tables

For more economic analysis and insights, visit our Business Data Lab.

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Aug 02, 2022

National Supply Chain Task Force needs to set clear priorities to support economic growth

By Robin Guy

Canada is a trading nation. Never more have Canadians understood what this means than these past two years, as the words “supply chain” became a new staple at the dinner table. From the global pandemic, to the wild fires and flooding in BC, to physical disruptions due to blockades and strikes, the transportation system has suffered severe disruptions beyond its limits– both preventable and unavoidable. Canadians expect our elected officials to work with business to ensure the preventable doesn’t hinder growth.

In Canada, our trade infrastructure matters more than for many other countries given the relative importance of trade for our economy. With roughly two-thirds of our GDP value in trade activity, this is higher than the OECD average of 56%. In the most recent Canadian Survey on Business Conditions, supply chain issues remain a key obstacle to growth, with businesses expecting these challenges to persist well into next year. Additionally, our supply chains must be reliable to attract investments. The competitiveness of Canadian businesses and Canada’s reputation in international markets depends on reliable transportation infrastructure that allows goods to be transported in a timely manner.

Earlier this year, the government announced a National Supply Chain Task Force to better understand our supply chain complexities and recommend ways to improve both the domestic and international linkages of our transportation system. The Task Force is to report to government within 100 days, which is fast approaching. As the Task Force finalizes its interim report, the business community is looking for a partner to address the preventable items hindering our transportation systems.

Firstly, the government must commit to a long-term infrastructure program that will support economic growth.

Canada has a serious infrastructure deficit, which will require us to triage priorities. It is essential that we avoid the temptation to spread whatever money is available thinly across Canada. Government needs to work with business to set clear priorities on infrastructure projects that will bring forward measurable economic returns.

Canada needs to ensure we can move cargo in all modes of transportation reliably and sustainably. Without serious investment in this area, we risk hindering Canada’s economic growth, competitiveness and international reputation, as we fall into being an unreliable partner for business.

There is a need for funding for projects that support redundancy in critical infrastructure to reduce risk of critical failures to supply chains (e.g. pipelines, bridges, railroads, marine ports and airports). Some of these investments include investing in projects that will expand rail in highly congested areas; increasing bridge capacity; and increasing industrial lands around airports and ports to sustain trade growth.

The Government’s National Trade Corridors Fund is a positive step forward. While it is supporting worthwhile projects in the key areas above, the government must work to increase the speed at which projects receive funding. Too often, projects are stalled due to government inefficiencies. It must work with business on ensuring transparency for projects and by continuing to demonstrate how funding is helping address supply chain challenges of both today and tomorrow.

Secondly, the government must adopt a formal vision for our trade corridors.

While the NTCF is a key pillar, the government currently lacks an overall vision for our trade corridors. The government must look to work with business to develop new gateway strategies, including for the Western, St. Lawrence and Arctic Gateways, that will better guide which projects are “shovel worthy”. These strategies should be guided by a vision that promotes economic growth through the collaboration and business stakeholders, such as port authorities, shippers, industries and key associations. These strategies will also set the tone for investments across all levels of government and the private sector.

Lastly, the government must address the labour shortage.

Ensuring Canadian businesses have the appropriate human skills will be essential. We have a million unfilled jobs in Canada right now. Addressing that will require people with the skills needed to fill supply chain gaps.

Canada has labour shortages in a number of key sectors, such as trucking that will become more urgent as the last of the baby-boomers retire. The federal government must collaborate more closely with provincial, territorial and municipal governments, and with the private sector, including businesses and chambers of commerce to better understand labour market needs across the country. This partnership should also include a dialogue on an inclusive workforce strategy that engages all segments of the population.

The Government’s Atlantic Immigration Program has been successful at helping attract skilled newcomers to address the labour shortage and drive economic growth. The government should look to scale up these successes when possible.

With these three priority areas taken together, the federal government and its National Supply Chain Task Force can ensure Canada’s most pressing supply chain issues are addressed. Prioritizing infrastructure that enables trade and economic growth need to be top of mind.


Robin Guy is the Canadian Chamber’s Senior Director, Transportation, Infrastructure & Regulatory Policy

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Jul 11, 2022

Western Executive Council meets Deputy Prime Minister and Minister of Finance, Hon. Chrystia Freeland, P.C., M.P.

On July 8, 2022, the Canadian Chamber of Commerce’s Western Executive Council met Canada’s Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, P.C., M.P. at the Vancouver International Airport, to discuss how to further strengthen our Western and Canadian economy.

Deputy Prime Minister Freeland provided the Council with an update on the opportunities and challenges facing Canada looking forward. She stressed the importance of Western Canada to growing the economy coming out of the COVID-19 pandemic.

The meeting was an opportunity for the Chamber’s Western Executive Council to discuss the importance of investing in Canada’s trade infrastructure to ensure goods can get to, and from, our trade partners. The Council also used the opportunity to stress the importance of Canada’s natural resources, including the criticality of the government’s commitment to support carbon capture, utilisation and storage (CCUS). The Council also discussed the importance of addressing the talent gap in Canada.

Learn more about the Western Executive Council.

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Jul 08, 2022

Labour Force Survey for June 2022: Surprise drop in monthly employment, but another record low unemployment rate, and wage pressures building

Despite the unexpected drop in employment in June, Canada’s labour market is still running very hot. Employers are looking to fill over one million job vacancies, at a time when the unemployment rate fell below 5% for the first time in monthly data. Wage pressures are building — they accelerated to 5.2% year-over-year in June, up notably from 3.9% a month earlier. This will only add to broader cost pressures for Canadian businesses, and the numbers will likely keep rising in the context of even higher inflation. This will make things particularly tricky for small and medium sized businesses who are already facing significant hiring challenges.

KEY TAKEAWAYS

  • Canadian employment unexpectedly fell by 43,000 jobs in June, more than offsetting May’s job gain. This was the first monthly employment fall that wasn’t related to tighter public health restrictions during the pandemic.
  • The good news is that hours worked finally bounced back in June (+1.3%) after two disappointing months, related to elevated work absences due to illness. On an annualized basis, hours grew 1.1% in Q2.
  • The unemployment rate fell below 5% for the first time since the monthly data began in 1976.
  • Employment in June was down almost entirely due to part-time position (-39k), while full-time employment was off only 4k. By industries, services sectors (-76k) were the source of broad-based weakness, especially in retail trade (-58k, -2.5%). Goods sectors were up 33k — mostly related to a bounce back in manufacturing (+26k) and construction (+23k). By gender, employment was down for both men (-26k) and women (-17k).
  • Labour markets remain very tight. With employers looking to fill over one million job vacancies, and new signs of faltering labour supply, wage pressures are clearly building — they accelerated to 5.2% year-over-year in June (up notably from 3.9% a month earlier), and are likely to continue rising, in the context of catching up to even higher inflation (7.7%). Wages for non-unionized workers are up 6.1% vs. only 3.7% for unionized (which may be held back so far, until more collective agreements expire and are renegotiated).
  • The student labour market has been strong so far this summer, with the student employment rate (53.2%) now above pre-pandemic levels (51.2%).
  • Provincial employment movedin a “statistically significant way” last month in a few provinces: falling in Newfoundland and Labrador (-1.9%) and Quebec (-0.6%), with gains in Prince Edward Island (+1.9%) and Manitoba (+0.6%).
  • In June, 3.3 million workers (18%) did so exclusively remotely.

SUMMARY TABLES

ENJOY MORE LABOUR CHARTS!

For more economic analysis and insights, visit our Business Data Lab.

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Jun 30, 2022

What We Heard: Women in Business Summit 2022

Wednesday June 22 marked our second annual Women in Business Summit, an event that aims to provide government and the business community with policy recommendations and practical tools and strategies to address barriers facing women in the workforce and Canada’s economic growth.

This year’s theme was Restarting, Reimagining, Accelerating and Recuperating: Women in the Post-pandemic Era. The day’s agenda was chock full of insightful discussions, from a brilliant keynote address by CBC’s Dragons’ Den’s Manjit Minhas to panel discussions about entrepreneurship, inclusive workplaces, career transitions, health and more.

For those who missed the day’s event or want to go back and rewatch the sessions in full, you can do so here.

For a summary of the day’s biggest lessons and takeaways, read on!

Keynote Speaker: Manjit Minhas

Be bold and unapologetic

Our morning kicked off with an inspiring keynote from “beer baroness” Manjit Minhas, co-founder and co-owner of the Minhas Breweries & Distillery and star Dragon on CBC’s Dragons’ Den. Her candid story detailed how, at the age of 19, Minhas and her brother went into business with one year of an engineering degree under her belt, $10,000 in personal savings and an idea – make high quality spirits with real ingredients, and sell them at a fair, everyday low price.

There’s no elevator to success. You have to take the stairs.

Manjit Minhas, Co-Founder, Minhas Breweries & Distillery

Yet, as Minhas was quick to point out, there was no overnight success. Years of hard work and a series of bold moves including a fateful business partnership forged on a cocktail napkin, travelling thousands of kilometers for quarterly meetings that she materialized out of sheer perseverance and having the courage to take on industry giants were key factors. Today, Minhas Breweries & Distillery have 1,000 employees and sell their products in 16 countries.

Top Tips from Manjit Minhas

  • Get comfortable taking risks.
  • Choose the people around you carefully, surround yourself with truth-tellers.
  • Ask for (and take!) help.
  • Don’t fear being wrong, learn from it.
  • Be unapologetic about who you are.
  • You don’t get what you deserve, you get what you negotiate.
  • Ensure you are lifting other women as you rise.
  • Always have goals … but write them in pencil so you can change and adapt as needed.

Mentors and sponsors (and why you need both)

Mentorship played an important part of Minhas’ entrepreneurial journey, and its importance was a theme that cropped up numerous times across several panels.

Mentors are an important resource that can help women network and grow professionally. Both mentors and mentees can teach new skills, offer guidance and serve as important role models for each other. Equally important however are sponsors. These are the people who serve as champions and will bring up women’s names when promotions and staffing are being discussed.

Key Takeaways

  • Mentors teach, but sponsors advocate – both are important.
  • Mentors have just as much to learn from mentees.
  • Mentors and sponsors are important to upskilling and leadership pipelines for women.

Top Tips

  • Seek out a mentor in your organization who is on a completely different team – it’s a great way to get exposure to other types of work and gives you a fresh perspective on your own.
  • When considering potential sponsors, remember that a sponsor doesn’t need to be a peak decision-maker but someone who will champion you in the room with them.
  • For mentors: ask prospective mentees to come to you with three questions and one thing they can teach you.
  • Consider offering “step-out projects” for employees to give them the opportunity to take on projects and deliver something of value, with the equally weighted goal of learning and getting exposure to different parts of the business.

Representation matters

Panel 1: Restart: Female Entrepreneurship in the Postpandemic Era

When people see themselves represented in the media, boardrooms, workforces and success stories, it sends the message that those achievements are possible.

Jenn Harper, Founder of Cheekbone Beauty shared her own powerful experience of seeing the Cheekbone Beauty Sephora billboard in Toronto’s Eaton Center for the first time. As a child she never could have imagined seeing mainstream Indigenous representation like that nor the possibility of someone like her owning a business. Now, she knows that young Indigenous women will know that they too can build something, thanks to the work of incredible Indigenous business leaders across the country. 

That girl will never have to question whether she can build something.

Jenn Harper, Founder, Cheekbone Beauty

Key Takeaways

  • Representation in the workforce inspires more participation in the workforce.
  • Including women and minority groups means more complete knowledge, ways of problem solving and better outcomes for employers and employees.
  • DEI doesn’t start and end with HR. Biases play out in meeting rooms, in informal conversations, so we need to ensure best practices are being implemented there.
  • What’s good for women is good for everyone; and what is good for everyone is good for women.

Top Tips

  • Use data to look for bias and don’t just look for the data that makes you feel comfortable with the status quo – look for the data that makes you uncomfortable. These are the areas holding you back, especially when it comes to diversity and representation.
  • Employers – try an “opt-out” mechanism vs. a self-nomination process when it comes to promotions and leadership pipelines. You’ll find many more women employees in the talent pool when they do not have to self-nominate.
  • Consider a formal skills assessments for employees – it will help employers fill open positions internally with employees who are very well suited to the job despite not having an obvious set of matching hard skills.
  • Include a third-party bias moderator in staffing discussions. They are trained to flag when bias may be affecting a decision.
  • Make sure you have supports in place for people with disabilities – otherwise you’re missing out on an entire talent pool.

Flexibility

Flexibility is the name of the game when it comes to the future of the workforce. From finances to workplaces and employee well-being, it’s crucial that both employers and employees integrate flexibility into their mindset and systems.

Lynn Groulx, CEO of the Native Women’s Association of Canada, shared the journey of transitioning Indigenous community care and services offered by elders, something that would traditionally never be offered virtually, to an online platform during the pandemic. Despite some initial reluctance, they were able to provide crucial services to over 12,000 Indigenous women – thousands more than they would usually be able to help.

We had to adapt. We worked with our elders, youth and community to find solutions, and we did find some.

Lynn Groulx, CEO, Native Women’s Association of Canada

 Key Takeaways

  • Let’s not revert back to what was considered “normal” in the workplace.
  • Productivity should trump presentee-ism. It’s not about how many hours someone is in the office, it’s about the work they are producing.
  • Exploring and investing in digital operations and services can help businesses become more agile.

Top Tips

  • Even if something seems like it will be impossible to do differently – try it anyways. The risk will often pay off.
  • Ensure distance and location are not factors when making decisions about advancement for employees.
  • Focus on employee outcomes over face-time.

People-first approach

One of the most common themes of the day’s panel discussions was the crucial need for employers to have a people-first approach to their business.

Empathy is what makes great leaders, strong CEOs and entrepreneurs. Asking questions like ‘What do you need?’ or ‘How can I help you?’ – those are the lessons we need to build back.

Maayan Ziv, Founder & CEO, AccessNow

Key Takeaways

  • Lead with empathy and kindness.
  • Flexible work policies are key to a people-first approach.
  • “Authenticity” has to be more than lip service. We need to understand what barriers exist for employees to be their most authentic selves, and then work hard to remove them.
  • A Care Economy Strategy is going to be crucial to keep women in the economy, and is something businesses and government need to work on together.

Top Tips

  • Implement flexible workplace policies that reflect and respond to the reality of employee’s situations.
  • Give people the paid time off and flexibility they need to access health care and resources – currently it requires a great deal of privilege to navigate access to healthcare.
  • Data is critical. When you’re working with data, qualitative data is just as important as quantitative. Conduct interviews and talk to people – it will reliably give you a different perspective than a survey.
  • Make sure workloads are manageable. Decide on what is “mission critical” vs. “nice to have”.
  • Leaders need to lead by example – by role-modeling behaviour, you communicate to your employees that it truly is ok.

For entrepreneurs

We heard from many inspiring entrepreneurs. Some of their top tips for aspiring entrepreneurs include:

Top Tips

  • Understand risk, but don’t shy away from it.
  • Build a small and supportive team to start.
  • Seek validation and ask questions of other entrepreneurs.
  • Start by focusing on dominating your own backyard, then grow out from there.
  • Know what you’re good at, and hire people for the things you are not good at. This will help you round out the skillset required for successfully growing your business.
  • Don’t be overly committed to your financial plan. The pandemic demonstrated the need for a flexible approach to finances and business plans.

And one more for the road

Top Tip

  • When it comes to big decisions, trust your gut and don’t forget to talk to the people who matter most to you. It’s easy to make assumptions about what your loved ones will think or worry about how your decision may impact them – talk to them and you may be surprised by their reaction. 
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Jun 30, 2022

GDP by industry for April 2022: A decent month, but dark clouds on the horizon?

Canada’s real GDP increased 0.3% in April, led by oil and gas and client-facing sectors, which was slightly better than expected. Unfortunately, StatCan’s advanced estimate for May shows a decline of 0.2%, which puts real GDP growth on pace for an annualized 3.9% in 2022Q2. This is good growth, but below the Bank of Canada’s most recent forecast (6.0%). On its own, this early warning sign is unlikely to deter the Bank from following through with another big interest rate increase in July.

KEY TAKEAWAYS

  • Canada’s real gross domestic product (GDP) increased 0.3% in April, led by oil and gas and client-facing sectors. This result was slightly better than the earlier advanced estimate (0.2%).
  • Unfortunately, StatCan’s advanced estimate shows a decline of 0.2% for May. Building in this anticipated drop in May, puts real GDP growth on pace for an annualized 3.9% in 2022Q2 — good growth, but below the Bank of Canada’s most recent forecast (6.0%). On its own, this early warning sign is unlikely to deter the Bank from following through with another big rate increase in July.
  • Output gains in April were relatively broad-based with increases in 13 of 20 sectors. Goods-producing sectors led the wayrising by 0.9%,while services were up only 0.1%.
  • The biggest movers of the month were:
    • “Client-facing” services continue to recover, with COVID restrictions significantly eased across the country.
      • Air transportation (20%) rose as travelers returned to the skies (and long lines).
      • Arts, entertainment and recreation was up(7.0%, with many hockey seasons extended — aside from the Leafs).
      • Accommodation and food services grew(4.6%) and has finally recovered its pre-pandemic level of activity!
  • Mining, oil and gas continued to enjoy gains (3.3%), which is unsurprising, given the recent strength of prices.
  • Real estate fell (-0.8%) for the second straight month, as the housing market correction appears to be gaining steam.
  • Finance and insurance pulled back (-0.7%). Financial conditions have started to tighten, as the Bank of Canada is aggressively raising interest rates to bring inflation under control.

SUMMARY TABLES

More from our Business Data Lab

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Jun 23, 2022

Pulse Check: Rising input costs top challenge for Canadian businesses in Q2 2022

Welcome to our Pulse Check blog series! A quarterly look at the top challenges and opportunities facing Canadian businesses from coast to coast to coast based on our Business Data Lab’s (BDL) analysis of the quarterly Canadian Survey on Business Conditions (CSBC).

For many of us, life is finally starting to feel more “normal.” But sadly, the latest CSBC reveals that the recovery remains incomplete for one-third of businesses. Businesses are dealing not only with a “cost crunch,” but also with difficulties recruiting and retaining labour, and supply chain pains.

It’s not all bad news, though. In this challenging environment, Canadian companies are cautiously optimistic about the near-term outlook, with sales expected to pick up in Q3. The survey shows that businesses innovated during the pandemic, and more organizational changes are planned for the year ahead.

Here are the top 10 things we learned about Canadian businesses from Statistics Canada’s Q2 CSBC:

  1. More than 361,000 Canadian businesses (one-third) still have not recovered fully from the pandemic.
  2. Businesses’ ability to take on debt continues to decline, with smaller firms being most constrained along with businesses in high-contact services, construction, health and social sectors.
  3. Rising input costs remain the top business obstacle.
  4. Inflationary pressures on businesses are broadening, with the recent surge in energy prices adding fuel to the fire and a record-high share of firms expect to raise prices next quarter.
  5. The competition for talent is a major pain point, with around one-third of businesses expecting labour difficulties in the next quarter; high inflation is expected to add further upward wage pressure.
  6. As COVID concerns subside, flexible work arrangements might be stabilizing, with between 6% and 12% of the workforce exclusively working remotely for businesses located in Canada’s major cities.
  7. Many companies expect supply chain problems to persist well into 2023; businesses are partnering with new and/or local suppliers and substituting inputs to address these challenges.
  8. As sales have shifted online, retailers are looking to invest in e-commerce capabilities, while larger firms are enhancing cybersecurity.
  9. During the pandemic, larger businesses continued to innovate. Organizational changes are coming in the year ahead for arts, entertainment and recreation, information and culture, and manufacturing businesses.
  10. Canadian businesses are cautiously optimistic about short-term sales, hiring and investment, while increased costs are expected to squeeze profitability.

The Q2 CSBC 2022 was conducted in April and May 2022 with 16, 678 Canadian business respondents from across the country.

Check out our full analysis here.

See Q1 analysis here.

What exactly is the Canadian Survey on Business Conditions (CSBC)?

Early in the pandemic, Statistics Canada created the CSBC in partnership with the Canadian Chamber, to quickly develop an innovative survey to learn about the issues facing Canadian businesses across the country, providing critical insights for decision makers and businesses. This successful collaboration has continued through our BDL.

Business Data Lab (BDL)

Our Business Data Lab (BDL) provides future-focused, real-time data and insights for companies of all sizes, sectors and regions of the country. The BDL brings together data from a variety of sources to track evolving market conditions, providing Canadian businesses with critical information to help them make better decisions and improve their performance. Learn more.

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