Joëlle Noreau | Senior Economist | Desjardins Group
Knowing what's happening at home and abroad can help you keep your business running successfully.
Here's our list of the main economic themes to watch.
1. The Canadian dollar
Several factors that can influence the loonie. For instance, if the Bank of Canada raises interest rates or if NAFTA talks lead to a new agreement. Surprises on the economic front can cause volatility in the Canadian dollar.
Why watch the Canadian dollar?
- It affects the cost of imports.
- Fluctuations will affect your profit margin (positively or negatively).
- If the dollar rises, it makes imported goods cheaper, which can put your business at a disadvantage.
2. Versatile employees in tight labour market
The labour market is tightening. In 2017 Quebec's unemployment rate dipped below 6.0%--a 40-year low. The population is aging and so is the workforce. This is causing serious problems for employee recruitment, and businesses are bearing the brunt.
Why you need a more versatile workforce:
- You avoid slowing down or halting operations when an employee leaves because a co-worker can pick up the slack, at least temporarily.
- Employees are more motivated when they have more variety in their work.
- There's a greater sense of belonging when employees feel invested in operations.
- New technology requires new skills.
3. NAFTA renegotiations
The 2017 NAFTA negotiations have made little progress. But they have highlighted the disconnect between U.S. demands and what the Canadian and Mexican negotiators are prepared to accept. It's a major concern because over 70% of Quebec's international exports are shipped to the United States.
Why are these negotiations important?
- If you export to the U.S., the outcome will affect your relationship with your American clients.
How can you prepare for the worst?
- Talk to your clients and underline the value of your business relationship.
- Play to your strengths, like price, product quality, after-sales service, your capacity to adapt the client's specs, how easy it is to do business with you and your unique product.
- Identify the breaking point in your business relationship.
- Diversify your export market. Local and government organizations can help you explore new markets in other countries.
... and 4 more things
It's important to watch for possible interest rate hikes by the Bank of Canada and the Federal Reserve and to keep an eye on the U.S. dollar, energy prices and the strength of the global economy.
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