The top obstacles for Canadian businesses continue to be rising input costs, difficulties hiring workers, and supply chain challenges, according to Stephen Tapp, chief economist of the Canadian Chamber of Commerce.
“Rising costs remain by far the number one obstacle for Canadian business right now,” says Tapp. “These cost pressures will continue to fuel inflation, which will add further pressure for the Bank of Canada to continue raising interest rates at a super-sized pace in their attempt to bring inflation under control,” he added.
Tapp’s comments follow the release of the Canadian Survey on Business Conditions (CSBC), a Canadian Chamber of Commerce/Statistics Canada initiative. Some of the worrisome results from the latest quarterly CSBC survey include:
- Half of businesses expect rising input costs to be an obstacle in the next quarter, holding steady from the last survey. Costs pressures are highest for businesses in manufacturing (76%). Cost pressures are being led by energy and transportation.
- Almost 4-in-10 businesses (39%) expect to raise prices in the next three months— a share that continues to rise from past surveys, up from 36% in the 2022Q1 survey, and just 26% in the 2021Q4.
- Supply chains challenges expected to continue: Of businesses that foresee supply chain challenges in the next quarter, 68% said their supply chain problems had worsened over the last quarter, resulting in delayed deliveries, higher prices and supply shortages. Looking ahead, businesses expect difficulties acquiring inputs over the next quarter domestically (28%) as well as internationally (18%). This issue is not going away soon. The majority of respondents expect supply chain challenges to continue for at least six more months, with 40% expecting supply chain obstacles to persist for at least one more year.
- Labour pains: Recruiting skilled employees is expected to be an obstacle for 37% of business, particularly those in construction, manufacturing, and accommodation and food services. The implications of these labour obstacles include working longer hours, slower business growth, hiring less suitable candidates and delays in fulfilling customer orders. Over half (55%) of businesses expect inflation to be a bigger issue when discussing wage increases with employees over the next year.
- Debt constraints for many companies: Over half of businesses (52%) reported they either could not take on more debt (33%) or do not know if they can (20%), up from 47% last quarter.
- Incomplete recovery from the pandemic: 28% of businesses say they are in a worse overall position compared with 2019 (pre-pandemic operations). Problems are most acute for accommodation and food services (46%), transportation and warehousing (35%), and arts, entertainment & recreation (34%).
The 2022Q2 CSBC was collected by Statistics Canada from April 1 to May 6, 2022. This survey includes responses from 16,678 businesses.