The Canadian Survey on Business Conditions from July to early August 2023, by Statistics Canada, indicates businesses continued to expect to face a variety of obstacles related to supply chains, rising inflation, and rising costs. However, pressures faced by businesses have continued to ease in the third quarter of 2023 relative to the previous two quarters.
“Nearly one in five businesses were facing challenges maintaining inventory levels or acquiring inputs, products or supplies, either domestically or abroad. Among these businesses, nearly one-quarter expected these challenges to worsen in the short term,” said the federal agency.
Christina Morillo
“Nearly half of businesses expected their operating expenses to increase over the next three months. Additionally, one-third of businesses expected their profitability to decrease, and just over one-quarter expected to increase the prices they charge.”
Statistics Canada said prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, fell 11.1% year over year in July 2023, following a 19.7% year-over-year decrease in June 2023. Meanwhile, average hourly wages rose 5.0% in July on a year-over-year basis, following increases of 4.2% in June and 5.1% in May.
“In that context, rising inflation remained the most commonly expected obstacle by businesses over the next three months, with 56.6% of businesses expecting this to be an obstacle. This was led by businesses in accommodation and food services (74.7%), health care and social assistance (64.4%), and mining, quarrying, and oil and gas extraction (63.2%),” said the report.
“The rising cost of inputs, including labour, capital, energy and raw materials, was the second most commonly expected obstacle, reported by over two-fifths (44.7%) of businesses. Businesses in accommodation and food services (68.2%) were the most likely to expect this to be an obstacle, followed by businesses in agriculture, forestry, fishing and hunting (64.1%) and manufacturing (56.1%).
“Rising interest rates and debt costs was the third most expected obstacle, with over two in five (42.5%) businesses expecting this over the next three months. Nearly three in five (58.9%) businesses in agriculture, forestry, fishing and hunting and nearly half of businesses in accommodation and food services (49.5%) and transportation and warehousing (49.4%) expected this to be an obstacle.
“Additional cost-related obstacles such as the cost of insurance (34.7%), transportation costs (29.7%), and rising costs in real estate, leasing or property taxes (29.4%) were each expected by around 3 in 10 businesses.”
In the third quarter, two in three (66.3%) businesses reported being either very optimistic or somewhat optimistic about their future outlook over the next 12 months, a decline from the previous quarter (73.5%). Nearly one-fifth (18.4%) of businesses expected their sales of goods and services offered to increase over the next three months, down from 25.9% in the second quarter. The industries that saw the largest changes from the second quarter were transportation and warehousing (-18.9%) and manufacturing (-16.4%).
“Over the next three months, just over one-quarter (25.9%) of businesses expected to raise prices, similar to 28.3% during the second quarter of 2023. Moreover, around 2 in 5 businesses in retail trade (42.0%) and accommodation and food services (40.8%), and approximately 3 in 10 businesses in construction (30.2%) and wholesale trade (29.8%) expected to raise prices over the next three months,” added the report.
“Nearly one in five (19.2%) businesses expected supply chain challenges of some kind over the next three months, down from the second quarter (22.9%). Businesses in retail trade (32.3%) and wholesale trade (29.2%) were the most likely to expect various supply chain challenges over the next three months. Among businesses that expected supply chain challenges of some kind over the next three months, 36.1% reported that the challenges they experienced have worsened over the last three months.”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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