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The Canadian Chamber of Commerce’s Business Data Lab has published their Survey on Business Conditions Report for the third quarter of 2024. This report details the results of a survey that collected data on how businesses across Canada feel about their performance and their outlook for the future. This is an important tool in judging the general perceptions of the Canadian economy and business landscape at the individual level. While business sentiment is the major factor in these reports, they also include data from the Bank of Canada that provide insights into inflation, employment, and the general economy. Comparing business sentiment with economic data allows us to look at the gaps in how the economy is really doing compared with how we feel the economy is doing.
Beginning with GDP growth, Q4’s forecasted growth is 1.5% which is up slightly from Q3’s forecast of 1.4% but still well below the Bank of Canada’s potential output growth rate of 2.5% for all of 2024. With these forecasts taken into account, this would result in a 1.1% annual GDP growth. The Canadian consumer price index has also remained within the Bank of Canada’s target range for the first seven months of the year with the current CPI change sitting at 2.5% year over year. This has resulted in the lowest number of companies expecting to increase their prices since Q2 of 2021 with only 12% of companies reporting that they will have to increase their selling prices. Unfortunately, because of the CEBA loan repayment deadline, business bankruptcies spiked in January of 2024 but have since fallen slightly due to interest rate cuts.
When looking at business sentiment, the business expectations index has declined slightly in Q3 of 2024. This index tracks general business sentiment with 100 points being the base level and anything above that level being positive outlooks and anything below being negative outlooks. In Q2 of 2024, this index was at 101.8 nationally but has since dropped to 98.4 with Ontario being particularly low at 96.3. At the sector level, Finance and Service sectors are the only industries that report improving expectations while all other sectors report deteriorating expectations for the next quarter with Agriculture and Transportation being especially low at 90.3 and 88.1 respectively. Despite all of this, London has a relatively high business expectation Index at 103.8 suggesting an improving outlook for the city over last quarter. The number of businesses nationally reporting an optimistic outlook for the next year has also reached 76.7%, up from 66.3% in Q3 of 2023, and only 13.1% of businesses reporting a pessimistic outlook for the coming year, down from 17.9% in Q3 of 2023.
Finally, the largest obstacles for businesses in Canada continues to be inflated costs and recruiting/labour. While businesses reporting that they have struggled with these obstacles have dropped they still remain the most pressing issues for companies nationwide. While the labour shortages have eased, the increased number of labour disputes has caused the most person days lost to labour disputes since 1986. This has resulted in supply chain issues across multiple sectors with the percentage of businesses reporting supply chain obstacles in both imports and exports increasing for the first time since Q1 of 2022.
