Canadian businesses anticipate inflation, the cost of inputs, interest rates and debt as major obstacles over the next three months, according to Statistics Canada’s Survey on Business Conditions released Nov. 25. 

Despite these concerns, expectations of cost- and labor-related obstacles continued to ease among businesses in the fourth quarter.

Inflation remains the most cited obstacle, with 44.9% of businesses expecting it to be a challenge, followed by rising input costs, 37.6%, which include labor, capital, energy and raw materials.

However, the survey noted this marks the first time since the third quarter of 2022 that the proportion of businesses expecting rising inflation to be an obstacle has fallen below 50%. 

Interest rates and debt costs are expected to be a challenge for 28.5% of businesses indicated in the fourth quarter to be an obstacle over the next three months, a decline from 34.1% in the third quarter and 40.6% in the second quarter.

When asked about their most challenging obstacle, 10.7% of businesses identified inflation.

Meanwhile, 37.3% of businesses expect to face labor-related obstacles over the next three months, such as challenges in recruiting and retaining skilled employees and labor force shortages. 

Additionally, 28.3% of businesses identified recruiting skilled employees as an obstacle, while 19.3% expect retaining skilled employees and 19.1% anticipate a labor force shortage to be a challenge. 

Optimism persists, with 71.6% of businesses feeling very or somewhat optimistic about their outlook over the next 12 months.

Other findings in the report:

• Sales. 16.6% of businesses expect sales of goods or services to increase over the next three months, down from 17.5% in the third quarter. The increase was led by retail trade, 25.8%; manufacturing, 24.1%; and information and cultural industries, 22.7%.
• Pricing. 19.3% of businesses expect to raise the prices of offered goods and services over the next three months, led by 34.5% of businesses in accommodation and food services.
• Wages. Over the next 12 months, 42.6% of businesses expect to increase average hourly wages. Among these, 17.0% expect wage growth over the next 12 months to be faster than the previous year, 57.6% expect similar growth and 15.5% foresee slower growth.
• Bilingualism. 15.6% of businesses required at least one employee to be bilingual in English and French, while 5.2% required all employees to be bilingual.

Statistics Canada conducted the survey from Oct. 1 to Nov. 4.