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Since the Bank of Canada lowered interest rates as
“insurance” against the risk of a sharper downturn,
many have been asking: How long will it take for the
fall in oil prices to impact the broader economy and
how severe will the slowdown be? What will it mean
for Canadian business?
Canada’s fourth-quarter GDP growth came in at a
brisk 2.4%, which looks pretty good, but when we
examine where the growth came from, there is cause
for concern. Household consumption was OK, but
exports and business investment both declined.
Instead, you can see in the adjacent graph that the
biggest contributor, accounting for three quarters of
the rise in GDP is inventories.
A sharp rise in inventory can be caused by businesses
stocking up in anticipation of stronger sales in the
future or, alternatively, if a sharp deterioration in
demand leaves unwanted stock. What’s the likelihood
that business was stocking up in anticipation of a
bonanza at the end of 2014? Not very good. Instead,
we’ve heard anecdotally that companies in the oil
patch were hit with a particularly sharp drop in sales,
and the concerns are broad-based with the auto sector
accounting for a big part of rising inventories.
There are three reasons we’re expecting a significant
slowdown in Canada. Firstly, the big declines in
capital expenditure have not yet been seen in the
broader economy. Remember that oil prices remained
above $75 until the middle of November and only fell
into the $50 range in December. There were many
announcements of cutbacks at the end of 2014 but
these will not be seen in operations on the ground until
the first half of 2015, a point confirmed by many
service providers in the energy industry.
Secondly, consumption looks soft as retail sales fell by
1.7% in January, signs that consumers are staying
home. Also, that big boost from inventories will
reverse and become negative in the quarters ahead as
the closures of Target, Mexx, Jacob and Sony subtract
billions from the inventory tally this year.
Thirdly, it is true that many manufacturing industries
are seeing a boost in sales from the weaker loonie and
a stronger U.S. economy. Canada’s auto sector and
aerospace industry exports have been particularly
stellar. However, oil and gas accounts for 24% of
Canadian exports, and those prices have fallen by half.
It will take a long time before manufacturing can
compensate for a 12% hit to Canadian exports.
Canada’s domestic economy has a hit a soft patch, so
we should be braced for bad news in the first half of
2015. Overall GDP growth should come in around
1.8% this year, and Canadian businesses will have to
focus more than ever on exports if they want to
maintain the strong growth rates we’ve seen. In the
meantime, it looks like we may need that insurance.
Chamber 2015/16 Term is just underway. There were 6 director's seats up for grabs, and after we had 11 candidates apply for the positions, we posted their answers to our questions online and went to a vote. The election remained open for 2 weeks and we collected about 300 votes. It was a very close race! The final results saw directors with equal amount of votes as well as some 1, 2 and 3 apart. With the calibur of candidates we had, it is no wonder:
We are pleased to welcome back our incumbents Brian Bonsma & Tom Dyas for another term, as well as the following new directors:
They were elected alongside
incumbents and will round out the Board of 14
members. Ken Carmichael will lead as President and all will be sworn in later
this month. We are thrilled that so many were interested in joining our organization and look forward to the diversity these individuals will bring to the table.
Finding a job (or reliable
employees) can be tough, let’s face it. The good news? It doesn’t have to be.
With our program Launch Students into Business having
already taken off several months ago, the New Year promises to connect over 25
students with industry professionals in their field, building meaningful
relationships and valuable connections for Kelowna’s up-and-coming young
With this network of connections
and their enhanced skill sets, we aim to provide these 3rd&4th
year students with the resources needed to plug themselves into the community,
enabling them to start their careers with confidence and ease.
So, this is a call to action. A call for those
who want to better themselves, or their organizations. We’re looking to take on
more students and connectors and are looking for individuals interested in
teaching workshops with us to further the students’ skill sets.
For professionals, this is your
chance to meet some of these soon to be grads first hand. To give them that
helping hand you would have appreciated starting out, and to get your business
in front of them, in an otherwise crowded market.
Students – this is an opportunity
for you to meet the people who will help you build your future. Why not get
your foot in the door?
We are after all types of
backgrounds: business, trades, arts, you name it. As BC’s 2nd largest chamber, we
have the member base to support all varieties of backgrounds and are eager to
To learn more or to get involved
in the program, please contact Stephanie at email@example.com or
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