Bank of Canada survey predicts continued supply constraints as post-pandemic demand rises Click image to enlarge

Canadian businesses anticipate increasing demand as the COVID-19 pandemic seems to be receding, according to The Bank of Canada’s Business Outlook Survey (BOS) for the third quarter of 2021.

However supply constraints will continue to limit sales and keep costs high, the survey finds. “Together, these demand pressures and supply challenges are driving widespread plans to invest, hire staff and increase prices,” the Bank says.

Some of the survey findings:

  • The outlook for domestic and foreign sales remains strong, especially for businesses providing ‘hard-to-distance’ services.
  • More firms face supply-side challenges. Labour shortages are frequent and more intense than last year while supply chain disruptions have increased and have worsened since last quarter.
  • These constraints are affecting sales and cost structures. More companies plan to increase wages to attract labour, and will pass these and other added costs on to their customers.
  • Most businesses that anticipate inflation above two per cent believe that the drivers of higher inflation are temporary.

“To meet demand and alleviate capacity constraints, most businesses plan to increase their capital expenditures and staffing levels over the next year,” the Bank says. “Heightened capacity constraints, including labour shortages, also contribute to the high level of the BOS indicator.”

The BOS summarizes interviews conducted by the Bank’s regional offices with the senior management of about 100 firms which have been selected to reflect the composition of the gross domestic product of Canada’s business sector. 

Read more here.

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