The Canadian economy exited last quarter with slowing inflation and low economic growth: CFIB forecasts no recession for now

Small Business Canada

The Canadian economy is expected to grow at a very slow pace for the last quarter of 2022 (1.2% annualized) and into early 2023 (0.6% annualized), according to the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB). CFIB’s quarterly economic report also forecasts the Consumer Price Index (CPI) inflation, both total and excluding food and energy, to recede in the first quarter of 2023 and reach 5.7% and 5.0% on a year-over-year basis, respectively.

We forecast that the economy has been on a slowdown last quarter and should continue on that path this quarter, without however contracting, which should make a recession 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.”

Job vacancy rates decline but remain high in Q4 2022

The national private sector job vacancy rate declined slightly in the fourth quarter (4.8%), 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.”

Across the country, Prince Edward Island and New Brunswick showed the largest quarterly increases, with 6.1% and 5.6% vacancy rates, respectively, while Quebec, BC and Saskatchewan saw slight declines.  

Businesses in the personal services, construction and hospitality sectors were the most affected by labour shortages with vacancy rates of 7.5%, 6.6.% and 6.1%, respectively.

Investment plans have slightly recouped but still below pre-pandemic levels

This issue of CFIB’S Main Street Quarterly also takes a special look at SMEs’ investment plans, which were below to pre-pandemic levels in the fourth quarter of 2022, with almost half (48%) of businesses investing.

Analysis shows that small businesses impacted by labour shortages are more likely to invest, which is one of the ways to cope with lack of staffing since a significant share of these investments includes office technology, process machinery or equipment. Also, businesses that are in good shape and are optimistic about their future are about three times as likely to invest than businesses who are currently in poor shape and expect weaker performances for the future.

“This data indicates businesses are willing to invest in technological solutions to help them deal with historically high vacancy rates, but it’s hard for them to do so in a state of uncertainty, high inflation and high interest rates. It’s crucial for policy makers to show strong support for small businesses and help create the conditions that enable them to hire and invest, so Canada’s economy as a whole can grow,” Gaudreault concluded.

Read the second issue of The Main Street Quarterly here.

About CFIB

The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 95,000 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

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

SOURCE Canadian Federation of Independent Business

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