Ontario business confidence plummeted to a new low this year, according to a new survey from the Ontario Chamber of Commerce (OCC), as businesses stare down labour shortages, high inflation and worrying economic forecasts.
The OCC’s annual Ontario Economic Report, the seventh by the organization, found only 16 per cent of surveyed businesses had confidence in the province’s economic outlook, down from 29 per cent of those surveyed in 2022.
“Ontario business confidence has dropped to a record low in 2023,” said Rocco Rossi, president and CEO of the OCC.
“Labour shortages, inflation, health-care system vulnerabilities, and forecasts of an economic contraction are dampening confidence in the province’s economic outlook.”
Inflation was one of the top sources of pessimism about the economy, the report said, as high prices put pressure on individuals and businesses.
Labour shortages and skills gaps were another major damper on business confidence as “employers across sectors struggle to hire and retain” staff at the levels needed to recover from the pandemic.
Other major concerns included supply chain issues and global economic uncertainty, “indicating the biggest concerns are not isolated to Ontario,” though some local factors like infrastructure gaps “may be aggravating supply chain backlogs.”
Businesses also appeared concerned about health-care system vulnerabilities related to understaffing and other issues, with 46 per cent of pessimistic respondents citing health care as a factor.
Small businesses were less confident in Ontario’s outlook than medium and large ones. The report said “the confidence gap” between small and larger enterprises grew during the COVID-19 pandemic, “as the crisis has been less forgiving to smaller organizations with fewer resources and flexibility to adapt or take on additional debt.”
Inflation has also had a big impact on small operations that have fewer resources, the report said. Larger businesses were more worried about broader workforce and infrastructure concerns like housing supply, public transit and broadband internet access.
Concerns about the economy aside, 53 per cent of surveyed businesses still felt optimistic about their growth potential, given high employment rates and a growing population. The report said diverse-led businesses were less confident about their internal outlooks, and businesses led by new immigrants were the least confident in their own outlook, at 44 per cent.
METHODOLOGY:
The seventh annual OER offers unique insights into business perspectives across Ontario. It is informed by data from our annual Business Confidence Survey (BCS) and economic forecasts for the year ahead. The BCS was conducted online from October 18 to November 30 2022, attracting responses from 1,912 organizations across Ontario.
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