Coming out of few rocky years and into another year of economic uncertainty, business confidence has dropped to a new low according to the Ontario Chamber of Commerce’s (OCC) seventh annual Ontario Economic Report (OER).
“Ontario business confidence has dropped to a record low in 2023. Labour shortages, inflation, health care system vulnerabilities, and forecasts of an economic contraction are dampening confidence in the province’s economic outlook,” said Rocco Rossi, President and CEO, OCC. “Only 16 percent of organizations surveyed have confidence in the economy. This is down from 29 percent last year. Promisingly, most businesses feel confident they can withstand these headwinds and continue to grow in the year ahead.”
The Ontario Economic Report is an interactive report with regional and sector-specific data on business confidence, public policy priorities, regional forecasts, and timely business issues such as employee health and well-being, climate change, succession planning, diversity and inclusion, reconciliation, and remote work.
Key highlights of the report include:
• Business confidence has dropped to a new low, with only 16 percent of organizations expressing confidence in the outlook of Ontario’s economy in 2023 (down from 29 percent in 2022).
• Inflation and labour shortages are primary concerns for organizations.
• Despite low confidence in the economy, 53 percent of businesses are optimistic about the outlook and growth prospects of their own organizations, as high employment rates and population growth should prevent a sharp decline in consumer spending.
• Small businesses want governments to prioritize policies and programs that support their immediate financial and operational challenges, while large businesses are more interested in broader workforce development and health care issues.
• Labour shortages are directly impacting most employers and 87 percent of large businesses. Shortages are especially acute in education, construction, and accommodation and food services.
• Businesses appreciate the importance of employee health and well-being, diversity and inclusion, economic reconciliation, and climate action – but there are notable gaps in addressing them.
After experiencing two years of employment growth of 2.4% in 2021 and 3.8% in 2022, employment in our region of Muskoka-Kawarthas is forecasted to grow by only 0.2% next year. For our region, 51% of businesses reported feeling confident in their own organization, 32% were neutral and 13% were not confident. These numbers show an increase in confidence in their own organizations over 2021 when 18% reported not being confident. Despite this optimism, local businesses feel less confident in the Ontario economy than the provincial average.
Locally, our top 10 policy priorities are:
• Invest in broadband internet infrastructure – 50%
• Reduce/simplify business taxes – 44%
• Encourage Ontarians to buy/travel locally – 44%
• Invest in workforce development – 35%
• Address health care system capacity – 34%
• Support businesses with energy costs – 32%
• Strengthen local supply chains, industries, and manufacturing – 31%
• Expand/improve access to mental health and addictions programs and services – 27%
• Enhance access to credit/capital – 25%
• Support businesses with technology adoption – 22%
“This year’s OER makes it clear that leaders in the public and private sectors must invest strategically in productivity, resilience, and long-term growth,” said Claudia Dessanti, Senior Manager, Policy, OCC. “Unsurprisingly, labour shortages continue to dominate as a source of concern directly impacting most employers and 87 percent of large businesses. Shortages are especially acute in specific sectors such as education, construction, and accommodation and food services.”
The seventh annual OER offers unique insights into business perspectives across Ontario. It is informed by data from the annual Business Confidence Survey (BCS) and economic forecasts for the year ahead. The BCS was conducted online from October 18 to November 30, 2022, attracting responses from 1,912 organizations across Ontario.
Check out the Ontario Economic Report here.
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