Canadian Survey on Business Conditions, third quarter 2024
Released: 2024-08-27
Cost-related challenges remain among the top obstacles anticipated by businesses in the third quarter of 2024, though the proportion of businesses expecting cost-related obstacles has continued to ease since the second quarter of 2024. Meanwhile, the outlook of businesses has gradually improved since the fourth quarter of 2023.
Real gross domestic product rose 1.1% on a year-over-year basis in May 2024. Consumer inflation has remained below the 3% mark in 2024, rising to 2.7% on a year-over-year basis in June. Meanwhile, employment was little changed in July with a marginal loss of 2,800 jobs, while the unemployment rate was unchanged at 6.4%.
In this macroeconomic context, Statistics Canada conducted the Canadian Survey on Business Conditions from July to early August 2024. The survey collects information on the environment businesses are currently operating in and their expectations moving forward.
Businesses continue to face a variety of obstacles (see Note to readers) related to inflation, as well as interest rates and debt costs. While pressures of both cost- and labour-related obstacles have eased in the third quarter of 2024, the proportion of businesses with a positive outlook has increased, continuing the recent upward trend that began in the fourth quarter of 2023.
Cost-related obstacles remain the predominate challenge for businesses
Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, declined 1.4% month over month in June 2024 and were up 7.5% year over year. Additionally, average hourly wages among employees increased 5.2% in July on a year-over-year basis, following a growth of 5.4% in June. In these circumstances, slightly over two-thirds (67.6%) of all businesses expect to face cost-related obstacles over the next three months, considerably higher than the proportion of businesses that expect to face labour-related obstacles (39.5%).
Half (50.2%) of all businesses expect rising inflation to be an obstacle over the next three months, cementing it as the top obstacle expected by businesses in each quarter since the first quarter of 2021. Businesses most likely to expect rising inflation to be an obstacle over the next three months operated in accommodation and food services (66.9%); retail trade (66.6%); and agriculture, forestry, fishing and hunting (57.6%).
The second most commonly expected obstacle is the rising cost of inputs, reported by 41.8% of businesses. This was led by businesses in accommodation and food services (65.9%); agriculture, forestry, fishing and hunting (64.9%); and retail trade (52.9%).
Over one-third (34.1%) of businesses expect high interest rates and debt costs to be an obstacle, led by those in agriculture, forestry, fishing and hunting (49.2%); transportation and warehousing (44.5%); and retail trade (43.4%).
When asked to indicate which expected obstacle would be the most challenging, 12.5% of businesses identified rising inflation, 10.1% indicated rising cost of inputs, and 9.0% reported recruiting skilled employees. Both the obstacles and the ordering remain consistent with the most challenging obstacles expected in the first and second quarters of 2024.
Businesses continue trend of optimism when considering their future outlook
Over three-quarters (76.7%) of businesses are either very optimistic or somewhat optimistic about their future outlook over the next 12 months. This is an increase from the second quarter of 2024 when 72.1% of businesses expected the same and continues the recent upward trend that began in the fourth quarter of 2023.
Over the next three months, 17.5% of businesses expect their sales of goods and services to increase, down from 20.7% of businesses in the second quarter of 2024. This was led by businesses in finance and insurance (26.7%); manufacturing (24.0%); and accommodation and food services (23.4%). At the same time, 19.6% of businesses expect to raise the prices of their offered goods and services over the next three months.
Over two-fifths of businesses expect a moderate level of growth in revenue over the next three years
Slightly over one-third (34.7%) of businesses expect revenue growth of 1% to 5% per year over the next three years, with an additional 11.7% of businesses expecting revenue growth of 6% to 10%. Combined, the results indicate that 46.4% of businesses are expecting a moderate level of revenue growth over the next three years. The businesses that expect revenue growth of 1% to 5% were led by those in retail trade (45.1%); administrative and support, waste management and remediation services (41.7%); and real estate and rental and leasing (39.2%).
Conversely, less than one-tenth (7.2%) of businesses indicated that they expect revenue to decrease over the next three years. Additionally, just over one-quarter (25.5%) of businesses reported that they do not know their expected revenue growth.
Furthermore, 10.6% of businesses expect to have no revenue growth over the next three years, led by businesses in health care and social assistance (19.2%); professional, scientific and technical services (12.2%); mining, quarrying, and oil and gas extraction (12.2%); and accommodation and food services (12.2%). Of businesses that expect no revenue growth, nearly half (47.0%) reported the reason as the economic environment being incapable of supporting significant growth, while 27.0% reported they were satisfied with their current level of revenue, and 16.9% cited intense competition as the reason for expecting no revenue growth.
Majority of businesses are confident in ability to repay debt in full and on time
Of the nearly three-quarters (73.7%) of businesses that do not plan to apply for debt financing over the next three months, over three-fifths (64.5%) reported being able to take on more debt. Moreover, the majority (57.3%) of businesses reported being very confident in their ability to make debt payments in full and on time. This was led by businesses in finance and insurance (70.0%); professional, scientific and technical services (64.7%); and health care and social assistance (63.6%). Furthermore, 28.1% of businesses were either somewhat confident or moderately confident, while 5.0% were either not very confident or not at all confident in their ability to make debt payments in full and on time.
Meanwhile, nearly one-quarter (22.2%) of businesses indicated being unable to take on more debt. Of businesses that reported being unable to take on more debt, the reasons cited include unfavourable interest rates (54.2%), cash flow (43.0%), and lack of confidence or uncertainty in future sales (34.3%). Businesses that were most likely to report being unable to take on more debt operated in administrative support, waste management, and remediation services (31.6%); mining, quarrying and oil and gas extraction (30.4%); and accommodation and food services (28.8%).
Majority of businesses report not needing any cybersecurity measures
Nearly one-quarter (22.2%) of businesses plan to take new or additional cybersecurity actions over the next 12 months, led by businesses in finance and insurance (38.3%); wholesale trade (36.8%); and professional, scientific and technical services (35.1%). On the other hand, the majority (54.4%) of businesses do not have any plans to take new or additional cybersecurity actions over the next 12 months. The primary reasons cited include not needing cybersecurity measures (57.1%) and having already taken any necessary cybersecurity actions (25.8%). Furthermore, nearly one-quarter (23.4%) reported that they do not know whether they will take on any new or additional cybersecurity actions over the next 12 months.
Majority of businesses have environmental practices in place
Two-thirds (66.7%) of businesses reported having environmental practices in place in the third quarter of 2024, with close to half (47.8%) indicating they currently reduce waste, while nearly two-fifths (37.5%) are reducing energy consumption, and one-third (33.6%) are encouraging employees to adopt environmentally friendly practices. This is comparable to the levels reported in the third quarter of 2023, when 68.4% of businesses indicated having environmental practices in place. On the other hand, nearly one-third (32.4%) of businesses plan to implement an environmental practice over the next 12 months.
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Note to readers
Data from the Canadian Survey on Business Conditions are now available. The tables provide data at the national, provincial and territorial levels by industrial sector, employment size, type of business and majority ownership. Data are also available for the 20 largest cities in Canada, by request.
Results from this survey are applicable to all employer businesses in Canada. This survey is carried out on a quarterly basis to collect information from businesses in Canada more efficiently and rapidly compared with traditional survey methods.
The most recent survey was conducted from July 2 to August 6, 2024, and respondents were asked what their expectations would be over the next three-month period. As a result, those three months could range from July 2 to November 6, 2024, depending on when the business responded.
Statistics Canada would like to thank Canadians who took the time to answer questions for this survey at this time and enabled a more robust understanding of Canadian businesses and the economy.
Products
The infographic "Business conditions in Canada, third quarter of 2024," part of the series Statistics Canada—Infographics (11-627-M), is now available.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).
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