By Ketki Saxena
Investing.com -- The Bank of Canada’s Business Outlook Survey for Q2 2022, released today, indicates that persistent inflation and prolonged supply chain issues continue to be the major concerns for Canadian businesses, contributing to increased uncertainty about the economic environment.
The number of businesses reporting labour constraints and supply chain bottlenecks remains at a record high. About half of firms with supply chain challenges expect them to persist until the end of 2023 or beyond.
Businesses’ expectations for near-term inflation have also increased, and firms expect inflation to be high for longer than they did in the previous survey. They noted various factors needed for inflation to return to target, including higher interest rates, improved supply chains, lower oil prices and a resolution of the war in Ukraine. As in recent surveys, many businesses anticipate significant wage and price increases. Pressures on input and output prices continue to be linked to supply chain issues.
Demand meanwhile, remains strong, supported by improved order books and increased sales inquiries from domestic and foreign customers, and many firms intend to increase investment spending and add staff over the next year.
However, Most businesses do expect sales growth to moderate , representing a normalization in demand conditions following an exceptionally strong recovery from the pandemic. Some firms also anticipate that labour-related constraints will limit their sales growth.