Optimism is climbing among top business leaders surveyed by CPA Canada, even as a majority of respondents continue to expect a recession this year, suggesting economic resiliency amid lingering inflationary wage and interest rate pressures.

More than a quarter (28 per cent) of respondents to the recent Chartered Professional Accountants of Canada Business Monitor Q2 survey said they are optimistic about the economy over the next 12 months, compared to only 18 per cent in the first quarter of 2023. Still, roughly two-thirds (68 per cent) of survey respondents said they anticipate a 2023 recession.

David-Alexandre Brassard

“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,” said 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.

“Most businesses are dealing with labour constraints driven by overall labour market tightness. This may relate to wage pressures for the 44 per cent of respondents who expect wages to increase by five per cent or more in the next year.

“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. The question is whether an additional rate hike would truly reduce the restaurant, entertainment, hotels and travel expenses of Canadians.”

The survey also found:

  • 56 per cent of respondents optimistic about the prospects for their businesses in the next year, compared to 45 per cent last quarter.;
  • 57 per cent believe their companies will have increased revenue over the next year;
  • 49 per cent say profits will increase over the next year;
  • 42 per cent anticipate a climb in employee numbers;
  • 53 per cent of respondents think they have fewer employees than they need, 31 per cent think they have exactly the number of employees they need, and the remaining 16 per cent think they have too many; and
  • 67 per cent believe that inflation is hurting their company, with the majority of those believing it will continue to impact their organization for at least six months.

Mario Toneguzzi

Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)

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