Q3 Business Conditions: Optimism holds steady, supply chain confidence plummets

Latest data on sentiment among Calgary businesses show that optimism levels remain high, cost-related pressures are easing but confidence in supply chain stability has tumbled

Calgary, AB, October 1, 2024 – For the third straight quarter, optimism among Calgary businesses has held steady. According to the Q3 Canadian Survey on Business Conditions, conducted by Statistics Canada in collaboration with the Canadian Chamber of Commerce, more than three-quarters (78%) of Calgary businesses report that they are optimistic about the year ahead, 5% higher than the national average.

“We are pleased to see optimism levels among Calgary businesses continue to be strong and steady. With inflation aligned to its 2% target and the Bank of Canada’s continued rate cuts, businesses are feeling some relief in cost-related pressures and that is likely driving these positive optimism levels,” says Ruhee Ismail-Teja, Vice President, Policy and External Affairs at the Calgary Chamber of Commerce. “However, we are concerned that businesses are losing confidence in our supply chains, likely due, at least in part, to recent labour disruptions in rail, air and ports. We continue to ask governments for support in ensuring our critical supply chains can continue to function – so businesses and Canadians alike can access the goods they need.”

Larger firms more optimistic than small firms

Companies with 1 to 4 employees are 11% less optimistic than those with over 100 employees. For many, access to capital, ability to take on more debt and access to labour have been critical and persistent challenges. Small firms, however, are 21% more optimistic than they were this time last year.

“Small businesses are the lifeblood of our communities, and while we are encouraged that the majority are optimistic, it is critical that we continue to support them in their growth. That means increasing access to capital, addressing labour concerns and stabilizing supply chains. As we celebrate Small Business Week in a couple of weeks, it is important to shed light on these challenges, celebrate our small businesses and continue to commit to their success,” says Ismail-Teja.

Cost-related pressures easing

In our analysis of Q2 business conditions, more than 60% of businesses were concerned about inflation and 47% were concerned about rising interest rates and debt costs. However, over the past quarter, inflationary pressures have eased, prompting the Bank of Canada to begin cutting interest rates. As of the Q3 Survey on Business Conditions, concerns over inflation and interest rates have dropped to 54% and 28%, respectively.

“Rising costs have been top-of-mind for businesses for nearly half a decade and this data shows that the recent interest rates are working. However, the true impact of rate cuts on inflation has not yet been realized, as it takes time for policy decisions to work their way through the economy. As such, we anticipate that cost-related pressures will continue to ease,” says Ismail-Teja.

Supply chain confidence plummets

While most Calgary businesses expect supply chain conditions to remain the same, one-third expect challenges to worsen – that is a 225% increase over the past year. What’s more is that only 0.1% of businesses expect supply chain conditions to improve.

“This past year has been dotted with labour disruptions in critical supply chains including rail, air and most recently in ports, says Ismail-Teja. “The fact that supply chains are essential to our economy cannot be understated and these disruptions have caused a lot of uncertainty for businesses of all sizes and within all sectors. We need to protect our supply chains so that our economy can continue to run, jobs are protected, and we can access the goods that people and businesses rely on.”

Key Recommendations

Governments play a critical role in creating a stable policy environment to incentivize investment, support business growth and build long-term prosperity. To that end, we recommend:

• Reducing red tape by simplifying regulatory environments, ensuring policy and regulation are not burdening businesses and stranding assets, freeing up businesses’ capacity to innovate and improve our waning productivity.
• Prioritizing investments in supply chain infrastructure, including rail, ports, aviation and regional manufacturing capacity, and working with all interested stakeholders to promote stability and mitigate supply chain disruption.

Quick Facts

• 78% of Calgary businesses are optimistic about the year ahead, a 12% increase over last year. Over one-quarter (26%) are very optimistic.
• 85% of Calgary businesses expect their sales to increase or stay the same in the next three months, while only 11% expect sales to decrease.
• 68% of businesses rate cost-related obstacles – inflation, cost of inputs, interest rates – and the top concern. Concerns are most acute in construction, real estate and leasing and arts, entertainment and leisure.
• 18% of business still can’t afford to take on more debt. Many point to unfavourable interest rates, uncertainty about future revenue or cashflow challenges as reasons.
• 28% of businesses are concerned about inflation, down from 47% in Q2 2024.
• 30% of businesses expect supply chain challenges to worsen over the next three months.

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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.