Canadian business owners are bullish on the economy’s rebound from COVID-19, with a new report finding investment plans and sales expectations for next year exceed pre-pandemic levels.
Yet the bright outlook for 2022 is clouded by a persistent labour shortage and supply chain disruptions that are expected to continue in the new year, the Business Development Bank of Canada found in its annual survey of business owners.
The Canadian Entrepreneurs’ 2022 Investment Outlook released Wednesday said 84 per cent of businesses are planning to maintain investments or invest more in their business over the next 12 months.
In addition, 83 per cent of businesses expect their sales will increase or remain the same, with accommodation and food service businesses the most optimistic, the study said.
“Confidence in the economy is strong,” said Pierre Cleroux, the BDC’s vice-president of research and chief economist. “We’re back to the pre-crisis level for the first time in 18 months.”
While economic growth slowed in the fall, the report said the Canadian economy should return to pre-pandemic levels in early 2022.
“Despite the fact that there are still some challenges in terms of the shortage of labour and the supply chain, people are optimistic,” he said. “They feel positive about the economy.”
Still, possible labour scarcity ahead means some economic uncertainty will continue in the new year, the report said.
Labour shortages are expected to emerge as the greatest impediment to investments in 2022, once demand and cash flow return to normal levels, the report said.
More than half of the businesses surveyed by the BDC have already encountered problems finding qualified workers — the highest proportion since the bank started its annual investment survey in 2019.
Businesses in the accommodation and food services sectors are the mostly likely to be impacted by labour shortages, the survey found.
“Many hotels and restaurants are looking for workers in a labour market that has fully recovered and where 20 per cent of those who lost their jobs have changed fields,” the report said.
It found that an aging population and lower immigration due to the pandemic could further worsen the labour crunch, with the Atlantic provinces expected to suffer the most.
The worker shortage has led to a heightened focus on efficiency and automation, especially for businesses facing high demand, the report said.
When asked about investment goals, the priority for businesses was improving efficiency followed by increasing sales and introducing new products, the report said.
The BDC conducted its annual survey in the fall of 2021 with a thousand small- and medium-sized business owners in Canada responding to the online poll.