High inflation, interest rates and housing costs continue to drive pessimism in Ontario’s economic outlook, according to the Ontario Chamber of Commerce’s (OCC) eighth annual Ontario Economic Report (OER).
Despite this, many businesses surveyed remain confident in their own outlooks, with 53% expecting to grow in 2024.
“In spite of the fact there seems to be a mood of pessimism in the air, the reality of it is there seems to be more bright lights than there are dim lights,” says Cambridge Chamber of Commerce President and CEO Greg Durocher. “We’ve had years where business confidence and prospects of being confident are going to be over 60% but given where we are today, I think having around 50% of businesses confident they are going to have a good year and grow is a positive sign.”
However, he says that figure doesn’t minimize the economic issues facing businesses, including affordability and also notes the struggle to achieve necessary tax reform measures continues.
“We must also ensure there is a balance or equity in tax distribution from not only a cost perspective but also on deployment so when money is being handed out it’s being handed out appropriately,” says Greg.
The OER contains regional and sector-specific data on business confidence and growth, public policy priorities, regional forecasts, and timely business issues such as supply chains, employee well-being, diversity, equity and inclusion, economic reconciliation, and climate change.
The report, compiled from a survey of businesses provincewide conducted between Oct. 12 and Nov. 21 and received just under 1,900 responses, states that 13% of businesses are confident in Ontario’s economic outlook. That represents a 3% drop from last year and a 29% drop from the year before with the cost of living and inputs, inflation, and housing affordability as the key factors for the confidence decline.
The sector showing the most confidence was mining, with the least confidence being shown in the agriculture, non-profit and healthcare social assistance sectors. The most confident regions were Northeastern and Northwestern Ontario, both at 23%, and the least were Kitchener-Waterloo, Windsor-Sarnia, and Stratford-Bruce County. (The survey indicated these latter two regions had a high share of respondents in the non-profit and agriculture sectors compared to other regions).
“As the report suggests, businesses still need to grapple with economic headwinds and many of those headwinds are limiting their ability to invest in important issues within the workplace and that may well be part of the reason they are having difficulty hiring people,” says Greg. “That said, entrepreneurs are interesting individuals, and they always will find a way to wiggle themselves through the difficulties of the economy.”
He questions whether the pessimism around growth and confidence outlined in the survey is related to the economy or stems more from the fact many businesses are unable to hire the people they require so they can grow their business.
“There are lots of companies out there that need people and that’s always a good thing when you’re at a very low unemployment rate now which is hovering around the 5% rate,” says Greg, noting he receives calls and emails daily from local companies seeking workers. “As inflation starts to drop and as the Bank of Canada rates start to drop, I think we’ll see that pessimism go away.”
Read the report.
February 19, 2024
July 28, 2023
Canadian Chamber of Commerce
January 29, 2021
March 27, 2020