COVID-19 Dampens Business Leaders’ Optimism

Supply chain concerns paired with a resurgent pandemic are the top two challenges to the growth of the Canadian economy cited by business leaders, according to a new survey conducted for Chartered Professional Accountants of Canada (CPA Canada).

The latest CPA Canada Business Monitor (Q4 2021), released January 19,2022, found that only 43% of respondents surveyed in the fourth quarter of 2021 were optimistic about Canada’s economic prospects over the next 12 months, down significantly from 52% the previous quarter.  The number of survey participants expressing outright pessimism remains basically unchanged (19% in Q4 versus 20% in Q3), but the number who remained cautiously neutral has grown to 38% from 28%.

The survey found that the number of respondents either extremely or very concerned about the effect COVID-19 might have on the economy in the coming year jumped to 37% in the last quarter of 2021 from 21% in Q3.

“For almost two years now, the pandemic and its economic fallout have put Canadians and our economy on an unprecedented and challenging course,” explains Charles-Antoine St-Jean, president and CEO, CPA Canada. “Business ingenuity and major contributions from governments have helped us weather the storm but, with the spread of Omicron, the private and public sectors must continue to work together to manage the evolving situation.”

The top five challenges to Canadian economy identified by respondents in Q4 were supply chain issues (20%), negative effects of COVID-19 (18%), the rise in inflation (15%), employee recruitment, retention and development (15%) and a lack of skilled workers (8%).

To help Canadian businesses attract skilled workers, survey participants want the federal government to increase immigration levels for people in job categories that are in demand (49%) and offer better support training for workers (47%).

To address recruitment and retention issues, respondents reported that their respective companies are increasing compensation (67%), supporting hybrid work arrangements (50%) and improving work-life balance options (46%).

Survey participants also believe the environment requires attention, with 63% agreeing that the federal government should focus on mitigating climate change.

Business leaders also continue to be worried about the federal government’s fiscal position, with 59% of the respondents either extremely or very concerned, down marginally from 63% in Q3. Thirty-seven per cent feel the most important factor to ensure responsible fiscal management of Canada’s finances is to set hard limits on government spending and indebtedness. Other solutions cited were improving oversight of government finances (25%) and conducting an independent review of government spending (24%).

While concerns about the overall economy have risen, optimism about their own businesses remains high at 69%, which is essentially unchanged from the previous quarter (70%).

Expectations for growth over the next 12 months saw 78% of respondents believing revenues will increase at their respective organization (74% in Q3), while 57% forecast an increase in the number of employees (52% in Q3). In terms of profits, 64% of those surveyed are expecting a rise, which is stable compared to Q3 (62%).

For the complete details, go to CPA Canada Business Monitor: Capturing the pulse of Canadian business.