CPA Canada survey shows that wage and inflation pressures are not damaging resilient sentiment among top business leaders
Those who lead Canada’s big businesses are being realistic about the economy but remaining generally positive.
Although 68% of respondents to CPA Canada’s Business Monitor survey in the second quarter are expecting a recession before the end of the year – and just 28% are optimistic about the economy (vs. 18% negative) – 57% believe their company’s profits will be up within the year.
“Business leaders expect a recession as higher interest rates make their way through the economy, but the rebound in optimism suggests that senior-level CPAs are noticing the resiliency of the Canadian economy,” says David-Alexandre Brassard, CPA Canada’s chief economist. “The economic slowdown is still on the horizon, but it should come later than previously expected and could very well be milder.”
Almost half expect profits to be higher and 42% say that their employee headcount will have increased, especially as 53% think they have fewer employees than they need.
But with a tight labour market, bosses are aware that wage-related costs may have further to go with 44% of poll participants expecting wage increases of at least 5% in the next year.
Inflation to see out 2023
However, two thirds of business leaders say that inflation is hurting their business and most expect things to remain tough in this regard for the next 6 months at least.
"Inflation is trending down overall, but it remains elevated for services. With vacation season here, a tight labour market and a stronger than anticipated economy, the Bank of Canada could implement an additional rate hike to limit spending on services,” adds Brassard. “The question is whether an additional rate hike would truly reduce the restaurant, entertainment, hotels and travel expenses of Canadians.”
