Rising costs have businesses concerned about profits

After a full year of dealing with pandemic-driven restrictions, many Canadian businesses are still bracing for tough times ahead.

According to the results of Statistics Canada’s Survey on Business Conditions, carried out in April and early May, more than one-third (37.1%) of businesses are expecting their profits to decrease over the next three months, with 25.7% expecting sales to decline.

“Businesses were concerned with future survival and expected to face a variety of obstacles in the short term,” StatsCan reported.

The rising cost of inputs — such as labour, capital, energy and raw materials — was cited as the most commonly expected obstacle over the next three months (37.8%).

More than one-quarter of businesses (27.8%) said that recruiting skilled employees, and attracting new or returning customers, are likely obstacles, too.

While most businesses (68.5%) said they could operate at current levels of revenue and spending for at least 12 months, 9.5% said they have less than 12 months before they’d have to consider closing down, and 20.7% said they have less than 12 months before they’d have to consider layoffs.

In a separate release, StatsCan reported that the number of active businesses remained down by 1.9% in February compared with pre-pandemic levels (February 2019).

Ontario has suffered the largest drop in the number of active businesses compared with pre-pandemic levels, down 4.5%, the agency noted. Business closures in Ontario soared in February, rising 19.0% from the previous month, amid continued public health restrictions in Toronto and Peel.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.