Future looks bright


P.J. HARSTON, SUN MEDIA

The current economic environment bodes well for small businesses, but finding skilled labour will remain a challenge, according to new research from TD Financial Group.

"The economic backdrop, including solid domestic demand and historically low interest rates, should be generally supportive for small business, particularly those serving local markets," says TD Financial Group deputy chief economist Craig Alexander, who authored the TD Economics outlook for small businesses.

"While export-oriented firms will face headwinds from U.S. weakness, their fortunes will improve in 2008," he said.

But not all is rosy for small businesses, which will continue to be challenged by tight labour market conditions, the report says.

The national unemployment rate will stay at close to a 30-year low over the forecast horizon and this is likely to put upward pressure on wages.

JOBS

Western Canada will suffer the most. The unemployment rate in Alberta will remain below 4%, while it is projected to stay below 5% in British Columbia.

Unemployment in Ontario is forecast to peak at less than 7% in 2007, considered low by historical standards.

"This is not to diminish the labour market difficulties in some sectors, like manufacturing, but for many other industries the greatest hurdle in recent years has been finding adequate staff with the necessary skills, and this appears likely to continue," said Alexander.

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TD REPORT FINDINGS:

- The economy should grow by an annual average of 2.4% in 2007, and further strengthen to 2.9% in 2008.

- Unemployment should remain near a 30-year low, and real personal disposable income is expected to rise by close to 2% annually over the next two years.

- The west will remain the growth leader until manufacturing conditions improve in central Canada -- expected in late 2007 or early 2008.

-Interest rates will remain close to current levels.

- Retailers are likely to experience a softer pace of sales, but the high employment rate and growth of personal income will keep Canadians shopping at the malls.

- Businesses will need to be nimble and adaptive.

from a healthy domestic economy, but growth may be tempered by a strong dollar and new passport requirements for individuals crossing the U.S./Canada border in 2008.

* A decline in housing starts and a cooling resale market will impact the construction and real estate industries, however, resale prices are expected to climb, meaning continued strong demand for real estate services.

* Wholesalers and manufacturers will be affected by exposure to international trade, with importers faring well and exporters experiencing challenges.

* Small and medium-sized businesses related to the auto industry and with strong ties to the Big Three assemblers will likely continue to face challenging times due to on-going restructuring in the industry.

* Competition will remain fierce, and that means businesses will need to be nimble and adaptive.



[ 2007-04-06 ]



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