Finally, some good news on the job front: Canadian businesses are feeling more optimistic about hiring. In the Bank of Canada’s Spring Business Outlook Survey, respondents said an improving U.S. economy and the depreciating dollar “are helping to support expectations for better growth prospects ahead.”
This sentiment is supported by Statistics Canada. In their latest Labour Force Survey they state employment increased by 43,000 in March, driving unemployment down 0.1 percentage points to 6.9 per cent. This is a positive development as overall employment growth in Canada has been subdued since August 2013.
Good News for Skilled Workers
Many businesses surveyed reported to be working at full capacity, but were still concerned how they would meet growing demand as the economy strengthens here and in the U.S. Firms report more pressure on their current work force as they deal with demand, especially those companies that sell outside of Canada. Firms cited a labour shortages only among skilled workers.This should be welcome news for anyone unemployed that has specific training, as firms will start to actively look for people who can do more skilled rather than general jobs.
The Lower Loonie Bonus
The Canadian dollar recently hit a five-year low at $0.88 USD and continues to hover close $0.90. This dip is good news for Canada’s export industry; a lower loonie means our goods and services are more attractively priced to foreign buyers and it is easier for companies to fill longer orders.
The report states, “Firms expect input prices to increase at a greater rate, largely reflecting the recent depreciation of the Canadian dollar.”
This is very good news for the BoC, which has shown concern over inflation’s inability to rise over the past few years. The BoC’s target for inflation is between 1-3 per cent, and that is exactly what businesses are preparing for in the short to medium term. Unfortunately, for consumers, some of those higher input costs will be downloaded in the form of higher prices of groceries, oil and gas and other everyday staples.
Easier Borrowing Conditions For Businesses
As it has been for homeowners, businesses say they are finding it relatively easy to borrow money to grow their business. Over the last three months, respondents found the credit condition further improved, and this access to funds makes it easier to hire and maintain a workforce. In this survey firms described credit as “easy or relatively easy to obtain.” Tighter credit conditions usually lead to business holding off on making any major hiring decisions.
What Does This Mean For Canadian Workers?
Those currently employed can be comforted by the fact that major job cuts aren’t looming. A stronger economy, with good credit conditions and an optimistic business environment is a great benefit for Canada’s workforce.
However, these conditions do set the stage for a rate increase. As recent as last month Bank of Canada Governor Stephen Poloz said he would not raise rates, and that the slow economic growth could be the norm.
However, these signs of improvement, along with positive surveys such as this one, signal that our economy could withstand a rate hike – we’ll have to wait and see how these changes play out with Canada’s monetary policy.