But one-third expecting recruitment, retention issues over next three months
Canadian businesses are entering the final quarter of 2024 with mixed sentiments, as optimism about the year ahead balances against ongoing challenges related to costs and labour.
According to Statistics Canada’s (StatCan) Canadian Survey on Business Conditions, nearly three-quarters (71.6 per cent) of businesses remain “very or somewhat optimistic” about their 12-month outlook.
In addition, 16.6 per cent of businesses expect their sales of goods or services to increase over the next three months, down slightly from 17.5 per cent in the third quarter.
Leading on this end are businesses in:
- retail (25.8 per cent)
- manufacturing (24.1 per cent)
- information and cultural industries (22.7 per cent).
Also, 19.3 per cent of businesses expect to raise the prices of their offered goods and services over the next three months, including over one-third (34.5 per cent) of businesses in accommodation and food services.
There is high optimism among Canadian business leaders when it comes to their company’s outlook and the prospective growth of the Canadian economy as a whole, according to a previous report from KPMG.
Also, over nine in 10 (92 per cent) small- and medium-sized business (SMBs) leaders are confident in their company's growth prospects over the next three years, banking on the use of artificial intelligence (AI).
What is the biggest challenge for companies?
Despite the positivity, cost-related issues continue to dominate business concerns, with 65.7% of businesses identifying them as obstacles for the next three months, according to StatCan’s report.
These concerns span inflation, input costs, interest rates, real estate expenses, and transportation costs.
Still, while rising inflation remains the most cited challenge, its impact appears to be easing; 44.9 per cent of businesses flagged inflation as a concern in the fourth quarter, down from over 50 per cent in previous surveys.
Also, the rising cost of inputs remains a significant issue for nearly two-fifths (37.6 per cent) of businesses.
Labour-related challenges also weigh heavily on businesses, with 37.3 per cent expecting recruitment and retention issues over the next three months. Recruiting skilled employees ranked as the fourth most cited obstacle, reported by 28.3 per cent of businesses, while 19.3 per cent cited retention and 19.1 per cent pointed to general labour shortages. Among these, 9.8 per cent identified recruitment as their most pressing challenge.
Wage growth remains central to addressing labour concerns. Over the next year, 42.6 per cent of businesses expect to increase average hourly wages. Of these, 17.0 per cent plan to raise wages at a faster pace than the previous year, while 57.6 per cent expect a similar rate of increase. Key factors driving wage decisions include inflation (54.4 per cent) and talent retention (49.3 per cent).
