Canadian Imperial Bank of Commerce CEO Victor Dodig says the country’s consumers are poised to start spending again once coronavirus vaccines become more widely available.
Dodig, who leads the country’s fifth-largest lender by assets, says an accelerated vaccine campaign will allow Canada to ease pandemic restrictions as other countries have. That should spur consumers whose finances weren’t hit hard by the pandemic to spend some of the extra cash they have saved over the last year, he said.
“There are parts of the economy that are more scarred than others, but I think that with that inflection point coming, I am reasonably confident that you will see a healthy, consumer-led recovery,” Dodig said in an interview last week.
Canada is set to ramp up its vaccination activity in the coming weeks, with as many as 14.5 million, or 38 per cent, of the country’s 38 million people expected to be fully inoculated by the end of June, the government said in an update last month. All Canadians who want the vaccine will have a chance to receive it by the end of September, the government has said.
Canada had just 1.4 per cent of its population fully vaccinated as of March 1, according to the Bloomberg Vaccine Tracker, which compiles data from government websites, news conferences and other sources. That trails countries including the U.S., which has fully vaccinated 7.7 per cent of its population, and Israel, where about 38 per cent are inoculated.
Dodig said he expects that restrictions like mask-wearing and distancing measures, along with more frequent testing, will remain a part of life even after vaccinations become widespread in Canada. Although Canadians will probably travel once they’re able to, that sector will still need some time before rebounding to 2019 levels, Dodig said.
He said he expects consumer spending to remain concentrated in many of the same categories that flourished through the pandemic, such as home improvement.
“What we’ve seen during the pandemic is much more of a focus on the home and lifestyle at home, and that will be a notable shift at least for the short to medium term,” Dodig said. “People will focus on their life and everything around them, their family, those most important to them, in terms of spending.”
With some restrictions remaining a way of life, CIBC is looking to build on the progress it made with its digital capabilities to give customers more self-serve options and to give workers more convenient ways to serve customers.
Those capabilities include a financial goal planner for customers, electronic signatures to reduce the need to visit branches and “full mobility” for relationship managers so they can work from anywhere and still be connected, he said.
“That focus on how technology can continue to advance banking, continue to strengthen the relationships that we’re building, is important,” Dodig said. “That’s what we’re obsessing about right now.”
So far, Dodig sees that focus paying off in CIBC’s results. The bank last week reported fiscal first-quarter profit that handily topped analysts’ estimates, driven by growth in its domestic mortgage business as well as strong results from its capital markets, commercial banking and wealth management segments.
The bank’s shares are up 16 per cent over the past 12 months, the second-best performance of the country’s six largest banks, behind Bank of Montreal.
For Canada as a whole, Dodig says policy makers need to ensure that businesses can to turn the consumer-led recovery into an investment-led one. Dodig has previously recommended policies such as using Quebec’s subsidized child-care system as a model for the country and allowing Canada’s tax-advantaged education savings plans to help mid-career workers acquire new skills.
“How do we ensure that the private-sector capital that is on the sidelines today — inside and outside our country — is put to good use to drive meaningful quality, sustainable and inclusive growth going forward?” Dodig said. “That’s got to be top of the agenda for policy makers.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
