SMEs expect economic headwinds to continue: TEC Canada survey
by CM Staff
Hardest hit was British Columbia with 75 per cent of respondents in the province reporting worsening business conditions in 2023, followed closely by Quebec at 71 per cent.
CALGARY — After a tough 2023, a majority of 417 CEOs of Canada’s small and medium-sized companies don’t expect much respite this year, according to TEC Canada. Cost pressures remain a challenge and most say they will increase prices for goods and services in 2024 to maintain profitability.
These are among the findings of the latest Canada-wide quarterly CEO Confidence Survey conducted in November and December by TEC Canada, one of the country’s leading organizations for business executives. The survey is an economic barometer for small and medium-sized Canadian businesses.
TEC Canada President and CEO, Todd Millar, says the latest survey shows that the belt-tightening reported in the Q4 2023 survey is continuing.
“As reported in an analysis of our survey findings by Dr. Peter Andersen, an independent consulting economist and former Assistant Chief of the Bank of Canada’s Research Department, weaker economy, high interest rates and tighter credit conditions are taking their toll on business confidence for small and medium-sized firms,” says Mr. Millar. “Last year was a tough one, with a sizeable majority of respondents – 63 per cent –saying business conditions worsened over the 12 months ending December.”
Hardest hit was British Columbia with 75 per cent of respondents in the province reporting worsening business conditions in 2023, followed closely by Quebec at 71 per cent.
The outlook for 2024 is slightly better with only 45 per cent of respondents nation wide expecting another year of deteriorating economic conditions. The outlook in Quebec is least favourable with 62 per cent of respondents expecting conditions to worsen.
Nevertheless, 74 per cent of respondents across Canada expect profits to stay the same as they were in 2023 or improve based in part on the belief that cost increases can be passed on to customers.
Supply chain shortages are reported by 72 per cent of respondents to have diminished. However, despite a positive outlook for firms’ sales volumes, the majority of respondents – 76 per cent –do not feel a need to add to inventories in 2024.
Most respondents – 58 per cent – believe Canada is either already in a recession or will be soon. The figure is highest among B.C. respondents at 63 per cent followed by Quebec (60 per cent), Ontario (59 per cent) and Alberta (54 per cent).
While all respondents anticipate economic headwinds in 2024, 39 per cent believe Canada is already in a soft landing or will soon be. A majority – 56 per cent –expect the Bank of Canada to begin cutting interest rates, either this spring or summer. Respondents’ median expectation has inflation pegged at three per cent this year, down from four per cent in the Q4 2023 survey.
Good news for workers is that most respondents – 64 per cent – say there will be no lay-offs this year although 29 per cent have already cut their workforces or are considering staff reductions with this figure rising to 34 per cent in B.C.
