Apr 09 2019
Decelerating economic growth has been a concern for the Canadian economy alongside broader trends that reflect an uneven global economic outlook. In this context, it is important to note where growth opportunities lie.
While top-line expansion is an indicator of development potential, hiring activity is another crucial barometer of future economic performance. A company decides to hire more employees in response to either an increase in demand or an anticipated rise in activity. Similarly, an increase in wage expenditure suggests a company is expanding its staff or raising salaries amid increased productivity.
As a result, employment gains and increases in wage outlays signal future growth. The most profound surges in employment and wage expenditures are centralized in new and rapidly developing Canadian industries such as Cannabis Production (IBISWorld report 11141CA) and E-Commerce and Online Auctions (45411aCA). However, several established industries such as the Heavy Engineering Construction industry (23799CA) are also characterized by rapid growth in revenue, wage outlays and hiring trends. IBISWorld has broken down the top three Canadian industries anticipated to experience a rise in employment and wages over the coming year.
Gas Stations with Convenience Stores
Easily overlooked, signs of growth for the Gas Stations with Convenience Stores industry in Canada (44711CA) are everywhere. Although depressed oil prices have curbed profound revenue expansion for operators, the resulting decrease in purchase costs has contributed to rising margins and driven establishment formation.
While revenue growth is anticipated to chug along in 2019, with an anticipated 1.9% increase over the year, profit margins have increased from 6.8% in 2014 to an estimated 8.8% in 2019. Lower fuel costs for Canadian consumers, combined with the convenience of one-stop product and service offerings, have encouraged operators to renovate and expand, either by adding more fuel pumps or larger convenience stores, thereby boosting employment 6.6% in 2019.
The industry has historically been dominated by a few key players, including Suncor Energy Inc. and Imperial Oil Ltd., which are collectively expected to account for over 70.0% of industry revenue in 2019. However, growing fragmentation has permitted new entrants to increase employment despite lacking the economies of scale characteristic of larger operators. Furthermore, as competition increases, operators have heightened customer service offerings to remain competitive. Accordingly, wages are anticipated to increase 5.8% in 2019.
Primary Care Doctors
Rising health expenditures, increased government spending and demographic trends are expected to contribute to a 6.9% increase in revenue for the Primary Care Doctors industry in Canada (62111aCA) over 2019. Amid rising demand, particularly from the rapidly growing portion of the population over 65 years old, the need for skilled labour such as nurses and specialized technicians has increased.
The skill sets required for the noted professions enabled wage growth to outpace employment growth between 2014 and 2019, suggesting a rise in average salaries. Wages for primary care doctors are expected to climb 6.2% in 2019 due to increased demand for employees specializing in medical billing, the handling of complex machinery and geriatric care. Employment growth is expected to lag behind, increasing 5.9% in 2019. However, both wage and employment growth have been restricted by the increasing number of physicians opting to work at hospitals (62211CA), which fall outside of the Primary Care Doctors industry.
Hospital wages are often more competitive than separate family practices, which has caused industry wage and employment growth to lag behind growth in establishments and revenue. Nevertheless, industry wages and employment are both anticipated to demonstrate healthy, organic growth amid a growing and aging Canadian population.
Distilleries in Canada (31214CA) makeup a key growth industry serving stiff drinks amid stiff competition. Boutique and niche distilleries capitalized on consumer trends over the five years to 2019, namely the boom in craft spirits consumption among Canadians, which led to strong business formation and hiring activity. This is expected to result in a 5.9% increase in employment alongside a 5.2% increase in wages in 2019. However, with only a 2.4% expected rise in revenue over 2019, industry wage costs and employment trends are more indicative of industry entrance rather than top-line growth.
Although small craft distilleries can respond to market demand faster than large corporations, the industry’s dwindling average employment per establishment figures have pressured wage growth, suggesting smaller producers have curbed labour expenditures to maintain profit margins. Nonetheless, rapid expansion and hiring patterns despite stringent government regulations during the period are cause for high spirits among industry operators.
Edited by Rebecca Simon