National Hardwood Magazine - March 2024

QUEBEC Continued

QUEBEC Continued According to Bank of Canada’s (BoC) fourth quarter survey, Canadian firms expect sales to slow as interest rates crimp consumer spending and they see inflation easing despite increased concerns over wages. Some 38 percent of businesses expect a recession over the next year, up from a third in the previous BoC survey, and 61 percent of consumers see a recession, compared with 55 percent previously. Businesses reported a decline in their order books compared with a year earlier, and more firms expect wages to increase over the coming year than the previous quarter. The business outlook indicator turned slightly more positive in the final quarter of 2023, rising to -3.15 from -3.45, as expectations for input and output prices eased. “Firms’ pricing behavior is slowly returning to normal,” the survey said. “Still, wage growth on average is expected to be higher than normal over the next 12 months, often related to cost-of-living adjustments.” In December, the average hourly wage growth for permanent employees accelerated at its fastest year-onyear pace in almost three years. Thirty-nine percent of businesses said their sales volumes had declined over the past year, attributing the decline to slowing growth, the impact of higher interest rates and inflation. Fifty-four percent of businesses expect inflation to run higher than 3 percent over the next two years, and 42 percent see it below 3 percent. Twenty-seven percent predict it will take longer than four years for inflation to return to 2 percent, up from 18 percent the previous quarter. “Short-term inflation expectations are slowly trending downward,” the survey said. However, businesses still expect inflation to remain elevated because of wage growth and the prices of commodities, food and housing. A separate Bank of Canada survey showed that consumers do not expect further interest rate increases over the next year. Consumer expectations for future inflation eased, as did their perception of current inflation. “Consumers perceive inflation to have decreased, and their expectations for price growth for some key goods such as food and gas have moderated,” the consumer survey said. The BoC held its target for the overnight rate at 5 percent in January. In its press release the BoC said global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the U.S. has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the Euro area, the economy looks to be in a mild contraction. In China, lower consumer confidence and policy uncertainty will likely restrain activity. Oil prices are about per barrel lower than was assumed in the October Monetary Policy Report. Financial conditions have eased, largely reversing the tightening that occurred last autumn. The Bank now forecasts global GDP growth of 2.5 percent in 2024, and 2.75 percent in 2025, following 2023’s 3 percent pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025. In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interests rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labor market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4 percent to 5 percent. BoC expects economic growth to strengthen gradually around the middle of 2024 and in the second half, household spending will likely pick up. Exports and business investment should get a boost from recovering foreign demand. Spending by governments contributes materially to growth through the year. Overall, the Bank forecast GDP growth of 0.8 percent in 2024 and 2.4 percent in 2025, roughly unchanged from its October projection. n Scan this QR Code to Receive a Free Digital Copy of National Hardwood Magazine - All 13 Issues! Check out our blog! nationalhardwoodmag.com Always Shows Up To Work Quick, easy installation Manufacturers and Exporters of Quality Pennsylvania Hardwoods Producing 25,000,000 BF annually • 1,500,000 MBF of Kiln capacity Specializing in Ash • Red Oak • Hard Maple • Soft Maple • Cherry Hardwood Lumber and Logs Export Packaging and Container Loading Band Sawn Lumber at Shinglehouse, Pennsylvania (U.S.A.) location. Log Sales - Bob Mallery Phone: 814-697-6576 FAX: 814-697-6637 escott@ramforestproducts.com Lumber Sales - Andy Nuffer Phone: 336-813-1512 FAX: 336-939-5414 anuffer@ramforestproducts.com Forest Products, Inc. 1716 Honeoye Rd. 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