Toronto, October 10, 2024 – The Canadian economy grew at a slower pace in the third quarter of 2024 and is likely to continue that trend in the fourth quarter, finds the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB).
Key highlights of the Q3 2024 edition of the Main Street Quarterly report
• CFIB’s estimates and forecasts in partnership with AppEco suggest Canadian economic growth slowed down to 1.2% in the third quarter of the year. The GDP is expected to continue growing at a slow pace in Q4, at 1.4%, as the economy continues to face some headwinds. The Q3 estimate for the total Consumer Price Index (CPI) inflation dropped to 2.1% year-over-year, and according to the Q4 forecast, it is expected to further recede to 2.0% in the last part of this year.
• The Q3 private sector job vacancy rate fell in all provinces and sectors. Nationally, it dropped to 2.7%, a level last seen in mid-2017. This represents 379,000 unfilled positions.
• A special analysis in this edition focuses on struggling and growing businesses. There were nearly twice as many struggling firms in the first three quarters of 2024 (at 5.8%) compared to the 2014-19 average (3.9%). On the other hand, the share of growing firms has almost halved, to 6.0% in 2024 from 10.8% in the pre-pandemic years. Businesses that are doing well are mostly constrained by a lack of labour and space, while struggling firms report a lack of demand and working capital.
• The quarterly sectoral profile focuses on firms in the health and education subsectors. Firms operating in these sectors are more optimistic than those in other sectors, however their confidence is on a downward trend in 2024. These businesses are mostly limited by skilled labour shortages and limited space. Their main cost constraints are occupancy costs and wage costs.
Conclusions by CFIB’s chief economist and vice-president of research Simon Gaudreault:
• The good news is that inflation is on the right path and expected to remain within the Bank of Canada’s target range in Q4. This should be a strong motivator for the Bank to make repeated and larger interest rate cuts in the coming months.
• Monetary policy is very restrictive at the moment, and we are seeing an important impact on demand, sales and the overall health of a weakened and not-so-optimistic SME sector. Both consumers and firms are impacted by the still-high interest rates. All of this helps to put in context our forecast that Canada’s GDP will continue seeing modest growth in the next quarter.
• While it is going to take some time for the interest rate cuts to completely work their way through the economy, there’s clearly an imbalance in the economic environment as the higher costs of doing business, already fully being felt and here to stay, continue to make it very difficult for small- and medium-sized firms to operate and grow.
For media enquiries or interviews, please contact:
Dariya Baiguzhiyeva, CFIB
647-464-2814
Public.affairs@cfib.ca
About AppEco
AppEco is a consulting firm specializing in economic and strategic analysis. It possesses in-depth technical expertise and delivers first-class services in applied economics: economic impact studies, surveys and polls, cost-benefit analyses, modelling, econometrics, pricing, etc. Its mission is to provide useful services that contribute to economic growth and the success of clients' projects. AppEco works with firms of all sizes, from small to multinationals, as well as governments and non-profit organizations. Learn more at appeco.ca/en.
About CFIB
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.
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