The non-profit that represents more than 60,000 businesses across Ontario is painting a gloomy picture when it comes to the confidence of its clients.
The Ontario Chamber of Commerce‘s (OCC) latest annual economic report says faith in the province’s economy is at its “lowest level” since it began tracking trends almost a decade ago.
OCC senior manager of policy Claudia Dessanti says only about 16 per cent of its clients surveyed have confidence in the overall economic outlook for 2023.
That’s down from the 29 per cent recorded from a previous study in 2021.
“So business confidence is dropping precipitously and it’s not surprising. Ontario’s economy is expected to slow down quite significantly in 2023,” Dessanti told 900 CHML’s Bill Kelly Show.
Dessanti says the main drivers include inflation, supply chain challenges and cost of living causing “pessimism” among not only consumers but businesses as well.
In Hamilton and Niagara Region, OCC data suggests business confidence is even lower, just 13 per cent.
The source of the negativity is pandemic-affected ventures relying on cross-border trade and tourism.
But the OCC also suggests those sectors will pick up as the year goes on, with supply chain backlogs impacted by the war in Ukraine expected to clear up somewhat and travel rebounding following an easing of COVID-19-related closures.
“It may be a little bit dampened because people are tightening their their pocketbooks, but if they remain employed, there should be more travel this year, particularly in the summer,” said Dessanti.
Rising interest rates affected the bottom line for many organizations that needed to take on debt during the pandemic to keep their businesses going.
COVID-19 tax deferrals coming due, the end of the Ontario staycation tax credit and inflation were top contributors to increased operating costs for small and medium businesses in 2022.
Dessanti says some respondants have simply had to take on more loans to compensate, realizing that only so much of added costs can be passed on to customers amid growing inflation.
“One of the questions we ask in our survey is what would you like to see from government?” Dessanti said.
“For small businesses, they’re looking for support with taxes … support with energy costs … really anything that can get them through cash flow day to day.”
Labour shortages present one of the biggest challenges with half of all businesses, 53 per cent, reporting deficiencies.
About 85 per cent of large businesses are reporting labour struggles, with the education, construction, accomodation and food sectors the hardest hit.
The study suggests businesses that required employees to be fully in person were twice as likely to experience staffing issues compared with those that accommodated virtual or remote work.
“It’s quite stark that one in 10 of jobs in the food and accommodation service sector is going unsold right now,” Dessanti said.
“So vacancies are having an impact on businesses’ ability to run their operations day to day.”
However, OCC members are staying optimistic about their own businesses, with 53 per cent believing they will see increases in consumer spending via rising employment rates and population growth.
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