​Data for Business: Business Sentiment Declines Amid Persistent Challenges in Q4
​Data for Business: Business Sentiment Declines Amid Persistent Challenges in Q4
‘Data for Business’ is an effort of the Langley Chamber, in partnership with the Canadian Chamber’s Business Data Lab, to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:
The latest Q4 2024 Canadian Survey on Business Conditions from Statistics Canada and the Canadian Chamber of Commerce provides a critical snapshot of the economic and business landscape. While some indicators show progress, the overarching theme is caution, as businesses face uncertainty from inflation, labour shortages, and consumer demand. See the highlights below and then read the full report here >
Key Insights on Business Sentiment
- The Business Expectations Index dropped to 96.4 in Q4 2024, reflecting deteriorating business confidence nationwide.
- Regional disparities are evident: Quebec and Atlantic Canada maintain stability, while Ontario and British Columbia report weaker sentiment. Among cities, Metro Vancouver ranks among the least optimistic in Canada.
- Only four out of 16 sectors reported improving sentiment, led by healthcare, professional services, and finance.
- Struggling sectors include construction, accommodation and food service, and transportation, highlighting ongoing pressures in goods-producing industries.
- Labour shortages are easing across some sectors, but industries like accommodation, retail, and manufacturing continue to struggle with recruiting and retaining skilled employees. Nearly half of these firms expect significant challenges over the next three months.
- Inflation has returned to the Bank of Canada’s target of 2%, allowing for interest rate cuts. However, rising debt costs and borrowing challenges remain significant obstacles, particularly for micro firms with fewer than five employees.
- In terms of pricing, there has been a steep drop in the number of companies expecting to raise prices in the second half of 2024, as inflation pressures ease.
- Cost-related pressures remain the top challenge, though they are beginning to ease. Rising consumer demand concerns now exceed labour challenges for the first time in over three years, signaling a shift in business priorities.
"Unfortunately, the year is ending on a low note as our Business Expectations Index slipped further into negative territory in the fourth quarter. This reflects weaker near-term prospects for sales as businesses are increasingly concerned about inadequate consumer demand.
Much like our winter weather, the regional economic picture fluctuates significantly across the country, underscoring the varied experiences of businesses. The outlook in Quebec and Atlantic Canada continues to show areas of relative business stability, while Ontario and British Columbia keep struggling, especially in the large metros of Toronto and Vancouver. The sectoral results reveal a few optimistic sectors, such as healthcare, professional services, and finance, amid the many more industries that are anything but cheery, particularly construction, accommodation and food services, and transportation. By firm size, the smallest “micro” firms (1-4 employees) have a very weak outlook, while businesses with more than 20 employees are much more chipper.
On obstacles, cost pressures remain prevalent but are nonetheless improving, while there’s some good news from the normalizing of firm pricing behaviour as inflation has come back under control. With the unemployment rate picking up and labour market slack building, labour challenges continue to ease." - Stephen Tapp, Chief Economic, Canadian Chamber of commerce