Despite ongoing concerns about inflation and interest rates, Canadian businesses are increasingly optimistic about their prospects in the months ahead, according to new research from Statistics Canada.
The latest survey of business conditions, which was carried out in April and early May, found that companies are bracing for an array of obstacles, including higher input costs and labour-related challenges, such as skills shortages and recruiting and retention issues.
Overall, the pressures coming from labour-based challenges rose in the second quarter, compared to the first quarter, StatsCan said, while concerns about cost-based obstacles continued to ease.
That said, according to the latest survey, the leading challenge businesses expect to face is inflation, StatsCan said, with over half (54.4%) of all businesses concerned about inflation.
Rising input costs — including labour, capital and raw materials — ranked second at 44.6%.
Higher debt costs and the impact of interest rates remained a concern for 40.6% of respondents, StatsCan said.
Regarding labour-related challenges, 43.2% of businesses expected to face labour-related obstacles over the next three months, up from 39.4% in the first quarter.
Recruiting skilled employees was cited as the most anticipated labour-related obstacle for all businesses, followed by labour shortages and retaining skilled employees.
Despite these various concerns, the overall outlook of survey respondents brightened, StatsCan said.
In the second quarter, the agency found that 72.1% of businesses were “very” or “somewhat” optimistic about the next 12 months.
“This continues a trend of a gradual increase in optimism when compared with 68.4% of businesses in the first quarter and 65.9% of businesses in the fourth quarter of 2023,” it said.
About a fifth (20.7%) of businesses expected their sales to rise in the next three months, the survey found, and 24.3% expected to raise their prices in the coming months.