New survey shows no relief from rising costs for businesses ahead of BOC rate announcement: Canadian Chamber of Commerce

(OTTAWA) – May 30, 2022 – The Chief Economist of the Canadian Chamber of Commerce, Stephen Tapp, issued the following statement on the latest results from today’s data release of the Canadian Survey on Business Conditions (CSBC), a Canadian Chamber of Commerce/Statistics Canada initiative.

“The top obstacles for Canadian businesses continues to be rising input costs, difficulties hiring workers, and supply chain challenges. Rising costs remain by far the number one obstacle for Canadian business right now,” said Tapp. “These cost pressures will continue to fuel inflation, which will add further pressure for the Bank of Canada to continue raising interest rates at a super-sized pace in their attempt to bring inflation under control,” he added.

Some noteworthy results from the latest quarterly CSBC survey include:

• Half of businesses expect rising input costs to be an obstacle in the next quarter, holding steady from the last survey. Costs pressures are highest for businesses in agriculture (76%), manufacturing (76%), construction (65%), and accommodation and food services (64%) industries. Cost pressures are being led by energy and transportation.

• Almost 4-in-10 businesses (39%) expect to raise prices in the next three months— a share that continues to rise from past surveys, up from 36% in the 2022Q1 survey, and just 26% in the 2021Q4.

• Supply chains challenges expected to continue: Of businesses that foresee supply chain challenges in the next quarter, 68% said their supply chain problems had worsened over the last quarter, resulting in delayed deliveries, higher prices and supply shortages. Looking ahead, businesses expect difficulties acquiring inputs over the next quarter domestically (28%) as well as internationally (18%). This issue is not going away soon. The majority of respondents expect supply chain challenges to continue for at least six more months, with 40% expecting supply chain obstacles to persist for at least one more year.

• Labour pains: Recruiting skilled employees is expected to be an obstacle for 37% of business, particularly those in construction, manufacturing, and accommodation and food services. The implications of these labour obstacles include working longer hours, slower business growth, hiring less suitable candidates and delays in fulfilling customer orders. Over half (55%) of businesses expect inflation to be a bigger issue when discussing wage increases with employees over the next year.

• Debt constraints for many companies: Over half of businesses (52%) reported they either could not take on more debt (33%) or do not know if they can (20%), up from 47% last quarter.

• Incomplete recovery from the pandemic: 28% of businesses say they are in a worse overall position compared with 2019 (pre-pandemic operations). Problems are most acute for accommodation and food services (46%), transportation and warehousing (35%), and arts, entertainment & recreation (34%).

About the CSBC: The CSBC was created in the spring of 2020 by the Canadian Chamber of Commerce and Statistics Canada to provide timely, relevant data on business conditions in Canada, as well as business expectations and views on emerging issues. The 2022Q2 CSBC was collected by Statistics Canada from April 1 to May 6, 2022. This survey includes responses from 16,678 businesses, and was conducted via electronic questionnaire, using a stratified random sample of business establishments with employees. Population totals are estimated using calibration weights.

About the Canadian Chamber of Commerce — The Future of Business Success

The Canadian Chamber of Commerce is Canada’s largest and most activated business network — representing 450 chambers of commerce and boards of trade and more than 200,000 businesses of all sizes, from all sectors of the economy and from every part of the country — to create the conditions for our collective success. The Canadian Chamber of Commerce is the undisputed champion and catalyst for the future of business success. From working with government on economy-friendly policy to providing services that inform commerce and enable trade, we give each of our members more of what they need to succeed: insight into markets, competitors and trends, influence over the decisions and policies that drive business success and impact on business and economic performance. 

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Contact

Phil Taylor
Contact: PTaylor@Chamber.ca (fastest response time)