OTTAWA - Canadian business sentiment has taken a downturn in the final quarter of 2023, as optimism among businesses waned, with only 9% of businesses feeling optimistic about the future. A Bank of Canada survey reflects growing concerns about a potential recession, with 38% of businesses now anticipating a downturn. Despite these challenges, there are indications of positive developments, including improved sales outlooks and a more favorable labor market.
The inflationary pressures that have been affecting the global economy are expected to persist in Canada, with inflation rates projected to stay above 3% for the coming years. This has implications for wage growth, which is anticipated to continue outpacing historical norms until at least 2025. This sustained wage growth is seen as a contributing factor to the ongoing inflation expectations.
Nevertheless, there is a collective anticipation among Canadian businesses that wage increases will stabilize by 2025, with 75% predicting a normalization in wage growth.
The report highlights a mixed economic landscape, with immediate challenges such as inflation and recession fears being counterbalanced by longer-term expectations of wage normalization and improved business conditions. The positive shifts noted in future sales prospects and labor availability provide a glimmer of hope that the Canadian economy may be poised for a gradual recovery, despite the present difficulties.
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