Real GDP growth in Canada is slowing as consumer spending and savings have shrunk, according to a report released today by The Conference Board of Canada. It also notes job growth could go negative in the first quarter of next year.

“Economic commentary in Canada typically revolves around a recession and whether it will be a hard or soft landing, but slow motion might be a more accurate way of describing the coming years,” said Ted Mallett, director of economic forecasting at The Conference Board of Canada.

The Conference Board of Canada forecast real gross domestic product will grow by 1.3% this year followed by a weaker 1.1% growth next year.

Consumer confidence has improved over the past few months but remains low by historical standards, according to the report. Inflation also remains a pressing issue for the consumer outlook due to fears that the inflationary bout could persist for longer than anticipated.

The report noted the deceleration of the economy is increasingly weighing down Canada’s labor market. Although employment growth exceeded expectations in the first quarter of the year, job growth is slowing, according to the report. It is forecast to weaken over the coming quarters, dipping into negative territory in the first quarter of 2024.

The Conference Board noted unemployment rate remains low by historical standards, but a combination of weakening employment growth and relatively strong labor force growth in 2023 will cause the jobless rate to rise.