While cost pressures remain a massive problem for Canadian businesses, they have started to turn the corner, according to the Canadian Chamber of Commerce.
Amidst the highest inflation in 40 years, a whopping 60% of Canadian firms expect inflation to be their biggest near-term obstacle, the latest quarterly Canadian Survey on Business Conditions, conducted by Statistics Canada, reveals.
And while rising costs are nothing new when it comes to the list of Canadian businesses’ biggest challenges, this is the highest level of concern in the survey’s history.
“Thankfully, there are tentative signs of improvement on this front,” said Stephen Tapp, chief economist with the Canadian Chamber of Commerce. “Consumer price inflation peaked in July, as energy prices finally fell back. And while cost pressures remain a massive problem for business, they too have started to turn the corner. As such, a smaller share of firms now plan to raise their prices over the next quarter (34%, down from the record 39% last quarter), which should slow inflation. Supply chain problems are also improving. A slightly smaller share of firms expect difficulties acquiring inputs or managing inventories, which is consistent with recent improvements in global supply chain problems.”
Here are the top 10 things the Canadian Chamber of Commerce gleaned from Statistics Canada’s Q3 survey:
- Growth outlook: With economic growth expected to slow in the second half of the year, Canadian businesses expect slower growth in sales, employment and investment, as well as shrinking profit margins next quarter. Looking further ahead, most businesses remain optimistic and expect modest, positive growth over the next three years.
- Key business obstacles: Canadian businesses continue to struggle with rising costs in a high-inflation environment, hiring workers in a very tight labour market and lingering supply chain challenges.
- Inflation: Canadian businesses identified inflation as their biggest near-term obstacle: 60% of firms expect this will be a challenge, representing the highest level of concern in the survey’s history. One glimmer of hope is that a shrinking share of businesses expect to raise prices over the next quarter, consistent with inflation decelerating in the second half of the year.
- Rising costs: Rising input costs are the second biggest near-term obstacle, cited by almost half (47%) of firms, down only slightly from the last survey (50%). Cost pressures are highest in agriculture, manufacturing and accommodation and food services.
- Labour challenges: Labour challenges intensified, with 36% of businesses expecting labour difficulties next quarter. These concerns are most acute in accommodation and food services, construction, health care and retail.
- Debt constraints: Businesses’ ability to take on debt remains constrained. More than half of businesses (52%) reported they either cannot take on more debt or do not know if they can, unchanged from the previous quarter, and still a bigger worry for small firms and high-contact services.
- Supply chains: Supply chains issues have improved, consistent with recent global trade developments. However, most Canadian businesses experiencing supply chain problems expect them to persist well into 2023.
- Interprovincial trade: More than half of all Canadian businesses conducting interprovincial trade experienced obstacles over the last year, such as differing certification and licensing requirements for goods, services and labour as well as taxes.
- Environmental practices: Most businesses have or plan to implement environmental practices over the next year, with reducing waste being the most prevalent. Customers’ unwillingness to pay higher prices is the top perceived barrier to businesses’ green efforts.
- COVID-19 measures: In the long term, over half of businesses plan to maintain health and safety policies and practices adopted due to the pandemic.
The Q3 CSBC 2022 was collected from July 4 to August 8, 2022 and is based on responses from 17,013 Canadian businesses across the country.
