Despite costs and labour challenges, businesses have an optimistic outlook

Statistics Canada survey finds most Canadian businesses remain positive

Despite costs and labour challenges, businesses have an optimistic outlook
Steve Randall

Canada’s economic environment for businesses is not ideal, but there are reasons to be optimistic despite continuing challenges.

While inflation has slowed and real GDP gained in the most recent data releases, businesses are still facing higher costs of raw materials along with labour shortages and rising wages, but the latest  Canadian Survey on Business Conditions from Statistics Canada shows an upbeat outlook.

Conducted between April and early May, the survey found that costs are expected to remain as an obstacle for businesses for at least the next three months with rising inflation cited as a leading challenge by more than half of respondents, especially those in hospitality, admin, waste management, and retail businesses.

Rising costs of inputs including labour costs, energy, and raw materials are the second-most-expected challenge while two fifths of businesses who participated in the poll said they expect rising interest rates and debt costs to be an obstacle in the next three months.

Canada’s low unemployment rate and the continuing talent shortage means that one third of businesses cite recruitment of skilled labour as a key challenge, while a quarter are concerned about retaining workers.

These labour-related issues are leading to business management working more hours, workers doing more hours, and a negative impact on business growth potential.

Despite these issues, the survey found that 72% of respondents in the second quarter are at least somewhat optimistic about their future outlook for the next 12 months.  This is up from 68% in the first three months of 2024 and from 66% in the fourth quarter of 2023.