Canadian Survey on Business Conditions, fourth quarter 2024

Released: 2024-11-25

Businesses continued to anticipate a variety of obstacles over the next three months (see Note to readers), primarily related to costs and labour. However, expectations of cost- and labour-related obstacles continued to ease among businesses in the fourth quarter and nearly three-quarters of businesses are very or somewhat optimistic about their outlook over the next 12 months.

Real gross domestic product rose 1.3% on a year-over-year basis in August. Consumer inflation has remained below the 3% mark in 2024, rising to 2.0% on a year-over-year basis in October. Meanwhile, employment (+15,000; +0.1%) as well as the unemployment rate (6.5%) were little changed in October.

In this macroeconomic context, Statistics Canada conducted the Canadian Survey on Business Conditions from October to early November. The survey collects information on the operating environment of businesses and their future expectations.

Cost-related obstacles remain at the forefront for businesses

While businesses anticipate a variety of obstacles over the next three months, cost-related obstacles, expected by nearly two-thirds (65.7%) of all businesses, remain at the forefront. Cost-related obstacles comprise inflation; the cost of inputs; interest rates and debt costs; the cost of insurance; costs in real estate, leasing or property taxes; and transportation costs. In September, prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, increased 3.8% month over month and fell 2.8% year over year. Additionally, average hourly wages among employees increased 4.9% on a year-over-year basis in October, following growth of 4.6% in September.

In this macroeconomic context, rising inflation continues to be the most commonly expected obstacle over the next three months, reported by over two-fifths (44.9%) of businesses in the fourth quarter. However, this is the first time since the category was introduced in the third quarter of 2022 that the proportion of businesses expecting rising inflation to be an obstacle has fallen below 50%. Businesses in retail trade (60.0%), manufacturing (53.6%) and accommodation and food services (52.0%) were the most likely to expect rising inflation to be an obstacle. Furthermore, when asked which expected obstacle would be the most challenging, 10.7% of businesses identified inflation.

The rising cost of inputs is the second most commonly expected obstacle over the next three months, anticipated by nearly two-fifths (37.6%) of businesses in the fourth quarter. The rising cost of inputs was expected to be an obstacle by nearly three-fifths of businesses in agriculture, forestry, fishing and hunting (57.4%) and accommodation and food services (55.3%), and nearly half (47.7%) of businesses in manufacturing.

Impact of interest rates on businesses

The Bank of Canada lowered its overnight lending rate for the fourth time in a row since June 2024, to 3.75% in October 2024. While over one-quarter (28.5%) of businesses indicated in the fourth quarter that they expect interest rates and debt costs to be an obstacle over the next three months, this is down from 34.1% of businesses in the third quarter and 40.6% of businesses in the second quarter. When asked about the impact of interest rates on the business over the last 12 months, 48.1% of businesses reported a medium or high impact, while 18.8% reported a low impact. Among businesses impacted by interest rates, the cost of existing debt was the aspect of the business most commonly affected, reported by one in three (33.3%) businesses.

Businesses continue to face labour-related obstacles

Nearly two-fifths (37.3%) of businesses expect to face labour-related obstacles over the next three months. Labour-related obstacles consist of challenges pertaining to recruiting and retaining skilled employees and shortage of labour force. Recruiting skilled employees is the fourth most commonly expected obstacle overall, reported by 28.3% of businesses. Meanwhile, nearly one-fifth of businesses expect retaining skilled employees (19.3%) and shortage of labour force (19.1%) to be an obstacle. When businesses were asked which expected obstacle would be the most challenging, 9.8% of businesses identified recruiting skilled employees.

Businesses continue to be optimistic when considering future outlook

In spite of the challenges businesses expect to face, in the fourth quarter, 71.6% of businesses indicated they are very or somewhat optimistic about their outlook over the next 12 months.

In addition, 16.6% of businesses expect their sales of goods or services to increase over the next three months, down slightly from 17.5% in the third quarter. This was led by businesses in retail trade (25.8%), manufacturing (24.1%) and information and cultural industries (22.7%). At the same time, 19.3% of businesses expect to raise the prices of their offered goods and services over the next three months, led by over one-third (34.5%) of businesses in accommodation and food services.

Over the next 12 months, more than two-fifths (42.6%) of businesses expect to increase their average hourly wages. Of these businesses, 17.0% expect the rate of increase in wages over the next 12 months to be faster than in the previous 12 months; 57.6% expect a similar rate of increase; and 15.5% expect wages to increase at a slower rate. Businesses that expect their average hourly wages to increase were asked about factors expected to influence their decisions about wages. Over half (54.4%) cited the current rate of inflation, making it the most common factor, while nearly half (49.3%) reported that retaining talent was expected to influence their decisions about wage increases. Furthermore, the expected rate of inflation was cited by 29.9% of businesses and the capacity to attract labour was cited by 26.0% of businesses.

Bilingualism among employees in Canada

In the fourth quarter, 15.6% of businesses in Canada had at least one employee that was required to be bilingual in English and French, while 5.2% required all of their employees to be bilingual. Meanwhile, 46.2% of businesses in Quebec and 28.9% of businesses in New Brunswick had at least one employee that was required to be bilingual.

Products

The infographic "Business conditions in Canada, fourth quarter of 2024," part of the series Statistics Canada—Infographics (Catalogue number11-627-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).