Real gross domestic product (GDP) was essentially unchanged in May, following a moderate 0.3% expansion in April. Inflationary pressures continued in July, when the Canadian Consumer Price Index (CPI) rose 7.6% year over year, following an 8.1% gain in June. Employment fell by 43,000 (-0.2%) in June, marking the first employment decline not associated with a tightening of public health restrictions since the beginning of the COVID-19 pandemic. There was a further decrease in July (-31,000), while the unemployment rate remained at a record low of 4.9%.
In this macroeconomic context, Statistics Canada conducted the Canadian Survey on Business Conditions from July to early August 2022. The survey collects information on the environment that businesses are currently operating in and on their expectations for the future.
The combination of inflationary pressures, labour challenges, and supply chain issues has impacted businesses in a number of different ways. Over the next three months (see Note to readers) businesses continue to expect to face a variety of obstacles related to rising costs, hiring and retention, as well as those related to supply chains and rising inflation. Almost one-third of businesses that are facing challenges maintaining inventory levels or acquiring inputs, products and supplies, either domestically or abroad, expect these challenges to worsen in the short term. Over the next three months, half of businesses expect their profitability to remain relatively unchanged, one-third expect to increase the prices they charge, and four-fifths expect their number of employees to remain the same.
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