Facing the highest inflation in 40 years, businesses continue to face obstacles that are holding back growth.
The Canadian Survey on Business Conditions Report for the third quarter of 2022 from the Business Data Lab of the Canadian Chamber of Commerce surveyed 17,000 businesses.
Part of the research is aimed at identifying obstacles to business.
Businesses rated the following as obstacles over the next three months:
• Rising inflation – 60%
• Rising input costs – 47%
• Recruiting skilled employees – 39%
• Transportation costs – 38%
• Shortage of labour force – 37%
• Rising interest rates and debt costs – 37%
• Cost of Insurance – 32%
• Retaining skilled employees – 31%
• Difficulty acquiring inputs, products or supplies from within Canada – 27%
• Rising costs in real estate, leasing or property tax – 26%
Key findings from the report include:
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 chain: Supply chain 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.
Businesses have been on an economic rollercoaster lately with new challenges arising as others start to fade. It appears that inflation may have peaked in July, but it’s still well above “normal” and we’ll be dealing with the implications for a while.
In fact, we’ll be dealing for a while with all of the obstacles highlighted. A report on the obstacles to business was never going to be particularly positive, but it lines up with much of the current advocacy program from our Chamber and the rest of the chambers and boards of trade that make up the Canadian Chamber of Commerce. We’re working to reduce bottlenecks and increase the security of our supply chains, relieve COVID-related debt repayment terms, finding solutions to barriers to interprovincial trade, and working with educational institutes and employment training agencies to address workforce shortages. Reports like this help us focus our efforts and work together on issues that affect the larger business community.
We’re clearly not out of the woods yet. These are big issues that require big partnerships. But Chambers are at our best working together, building partnerships and tackling the issues holding back businesses across the country.
The Peterborough and the Kawarthas Chamber of Commerce acts as a catalyst to enhance business growth, opportunity, innovation, partnerships and a diverse business community.