While challenges haven’t evaporated, Canadian businesses are anticipating easier operating conditions in the months ahead, according to new data from Statistics Canada.
The latest survey of business conditions, which was carried out from January to early February, found that companies are expecting to face continued obstacles — including supply chain disruptions, inflation and labour supply issues — over the next three months.
However, these pressures are expected to ease somewhat compared with the previous quarter, StatsCan noted.
For example, just over one-quarter of businesses (26.3%) reported that they expect to face supply chain challenges over the next three months.
Yet, only about one fifth of firms (20.3%) expect these challenges to worsen in the short term — which is down from 29.8% in the previous quarter.
At the same time, StatsCan reported that half of businesses expect their operating expenses to increase over the next three months, one-third expect to raise prices, and a third expect their profits to decline.
“Rising inflation remained the top obstacle expected by businesses over the next three months,” the report noted, followed by the rising cost of inputs such as labour, capital, energy and other raw materials.
While costlier inputs are expected to be met by higher prices in the months ahead by about one-third of businesses, StatsCan said price hikes are expected to be lower than last year’s peak inflation rate.
Most businesses (70.4%) said they did not intend to take on new debt over the next three months.
Most of these firms said they have the capacity to add debt, if needed, while those that don’t have the ability to add debt indicated that high interest rates, or uncertainty about future sales, would prevent them from increasing their borrowing.