Rising interest rates, high debt loads, and weaker employment and wage growth will contribute to restrained consumer spending in 2019. This will lead to the cooling of Canada’s economy, according to the Conference Board of Canada.

While job growth has rebounded in recent months, overall employment growth in 2018 was moderate. Increased retirements partly caused the sluggish employment growth. This has resulted in labor shortages across many industries, with the unemployment rate hitting a record low of 5.6% in November. Wage growth was also weak, but it is expected to rebound next year as firms compete for a limited number of workers.

"Canada's economy is facing a few challenges heading into 2019. Consumer spending has been driving economic growth over the last several years, but Canadians are tightening their purse strings. Economic growth in 2019 will depend on improved business investment and a better performance from the non-energy trade sector," said Matthew Stewart, director, national forecast, the Conference Board of Canada.

The Conference Board of Canada forecasts that Canada's GDP will rise by 1.9% in 2019, down from an expected 2.1% gain this year.

The Conference Board of Canada also reported that investment in Canada's energy sector will continue to moderate due to the decline in oil prices and lack of pipeline capacity. Government spending is also expected to slow due to rising fiscal deficits. These factors will contribute to the cooling of the economy next year.

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