Trending in Business: 2017 in Review and Predictions for 2018

By Grant T. Smith


Business 2017 in Review and Predictions for 2018What an interesting month November proved to be, or perhaps, what an interesting fall. I say this because we got a flurry of numbers and economic inputs in the last little while and I thought we should try and make sense of a few of them.


In the last week I noted:

  • The economic growth slowed in the quarter to an annualized pace of 1.7%.
  • Unemployment fell to the lowest levels in 10 years, down to 5.9%.
  • The Canadian dollar rose more than 10% against the US greenback during the early fall.
  • Investments in housing structures fell 1.4%. largely due to regulatory changes.
  • Indications are that the pipeline business is back in…well, you know.
  • The price of crude oil is heading upwards as the Petroleum Exporting Countries have agreed to extend production cuts to the end of 2018 to increase prices.


In our business over the last few months we noted:

  • Professional staffing costs are skyrocketing in Vancouver by as much as 15-20 per cent due to serious lack of strong candidates.
  • The boom is on for two keys public areas and you will not be surprised to learn they are the marijuana and blockchain industries.
  • The mining sector is still experiencing a significant expansion.


So what does all of this mean? I can but speculate and that is invigorating, because I love to engage in random conjecture. So let’s take a look at what happened in 2017.


US Federal Budget


As usual, the key driver of economic growth is the United States of America, where business people have spent a year in expectation of the new budget. If you have been following that process, you will know that business is quite excited about the possibilities of a major corporate tax cut. Well the bill took significant strides in the past week and I warrant that is not great news for the NYSE as I tend to believe that the market declines on news while thriving on expectations. The reality is never as good as the hope. So I see the new budget being passed as something that could create a dip in the NYSE but encourage actual growth as businesses reinvest in the USA.


Expectation – this indicates continued growth for the US.


Economic Growth in Canada


My first observation above was that Canadian growth had slowed in the last quarter. Growth slowed because of a number of the other indicators. Not least of which is the change in the strength of the loonie, since much of the growth earlier in the year was export driven (remember that building or extracting something using the loonie and then exporting it using the US currency is more profitable with a weaker dollar). The loonie strengthened, in part, because the Bank of Canada raised interest rates, which made the loonie more attractive (since one can earn high interest in Canada with the rate increase) and in turn caused a slowdown in exports. Another factor causing a slow down may have been the regulations on housing, specifically the requirements to increase down payments. This restricts the ability for new home buyers to enter the market place (especially in the key markets of Toronto and Vancouver) and also restricts prices since builders are chasing the new home buyers.


Expectation – this indicates slower controlled growth for Canada.




Now we should consider unemployment.  If things stared to slow in the last quarter why has unemployment fallen? Should not a slowing of growth result in slower hiring? Yes, generally it should, but I speculate that business has reacted cautiously to the expansions earlier in the year. Certainly my tendency, as a business operator, has been to keep staffing as low as practical and let it follow rather than lead growth. While this is perhaps more the mind of a conservative, risk-averse business owner than an entrepreneur, it is consistent with the Canadian psyche. Hey, it is not easy taking risk when you still have a mortgage to tend to.  


The downside is I also see inflationary pressure from the unemployment situation and here is where I draw a direct connection to my own business. It has been close to ten years since my sector has really invested in hiring and developing personnel and there is now a real shortage of qualified people. Clearline is fortunate that we have consistently done two things:

  • Continued to hire and develop talent (did you see our CFE results as posted on Linked-In WOW!)
  • Built a diverse practice with a great culture that enables us to keep hiring when others struggle to find staff.


Still, the impact on salaries has been extreme and the rising costs will be felt by our clients as prices are reflecting real increases, where they have been stable for many years.  


Expectation – this indicates continued growth for Canada and the investment will result in growth for the new year.


Growing Industries


What about the reviving sectors mentioned above –  Energy, Currency and Grass? Those all indicate growth and expansion for Canada.


With all that in mind, here are the key take-aways for 2018:

  • Watch for growth.
  • Expect some inflation.
  • Stand by for moderate interest rate increases.
  • Take care of your family and stay healthy.


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