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June 25 2024

Q2 Business Conditions: Consistent trends may indicate a steadying economy

Calgary, Alberta, June 25, 2024 – In concert with declining interest rates, inflation trending closer to target, stabilizing commodity prices, and consumption growth in line with population growth, recent data from Statistics Canada on business sentiment points to a possible steadying of the economy, after several years of volatility.

“We’re encouraged by the latest data indicating a positive outlook on the part of businesses. Given the overall economic uncertainty businesses have faced, this trend points to a strengthening economy – and that’s a good news story for businesses and their employees,” says Deborah Yedlin, President and CEO of the Calgary Chamber of Commerce. “While critical challenges remain regarding rising costs for inputs and labour, the level of acute concern seems to be levelling out – and in some cases going down – with outlook more positive than in recent years.”

Strong economic and population growth driving positive sentiment

For the second consecutive quarter, the Q2 Canadian Survey on Business Conditions, conducted by Statistics Canada in collaboration with the Canadian Chamber of Commerce, shows Calgary’s business sentiment remains optimistic at 79 per cent – over 6 per cent above the national average. This quarter, the level of “very optimistic” businesses increased 10 per cent compared to last quarter, likely driven by more positive economic trends.

One reason for continued optimism is the stronger economic growth forecasted across Alberta. With the provincial real GDP expected to expand by 2.5 per cent in 2024 (over double the national average) and population growth continuing, there is much to be excited about in Calgary. This is reflected by 78 per cent of Calgary businesses anticipating either stable or increasing profits over the next three months.

Cost and labour pressures continue to weigh on businesses

Despite a strong growth outlook, 76 per cent of businesses note the cost of doing business continues to be a challenge. The sectors most acutely impacted are the accommodations and food services (99%) and transportation and warehousing (95%).

Captured within cost-related challenges, businesses continue to struggle with rising inflation (61%), rising cost of inputs (47%) and rising interest rates and debt costs (47%). However, with the recent Bank of Canada interest rate cut of 0.25 per cent, we may see another rise in business confidence and a shift in cost-related concerns for businesses next quarter.

Rounding out the top business concerns is labour-related obstacles, with 47 per cent of businesses highlighting it as a primary issue, an increase of nearly 9 per cent from last quarter, and 14 per cent above the 2023 average, pointing to a persistent skills mismatch in Calgary’s labour market. Businesses with 100 or more employees are the most concerned with labour, at 75 per cent, a significant jump from 49 per cent last quarter. Ensuring immigration programs are tied to in-demand skills will be critical to supporting businesses most challenged with talent.

To grapple with labour-related concerns, businesses are demanding more from their existing workforce. Over 41 per cent of respondents noted management will work longer hours, 37 per cent are asking staff to work increased hours and 36 per cent will choose candidates less suitable to fill vacancies. Moreover, 36 per cent believe labour-related challenges will limit organizational growth altogether. While these short-term accommodations are keeping businesses afloat, long-term support is needed.

Broadly, the economic outlook is positive for many Calgary businesses. However, despite general optimism, and resilience in finding ways to overcome both cost and labour-related challenges, longer-term solutions are needed to support growth, including:

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ABOUT THE CALGARY CHAMBER OF COMMERCE

The Calgary Chamber of Commerce exists to help businesses reach their potential. As the convenor and catalyst for a vibrant, inclusive and prosperous business community, the Chamber works to build strength and resilience among its members and position Calgary as a magnet for talent, diversification and opportunity. As an independent, non-profit, non-partisan organization founded in 1891, we build on our history to serve and advocate for businesses of all sizes, in all sectors across the city.

For media inquiries, please contact Brittany Brander, Manager, Public Relations & Communications at media@calgarychamber.com.