More Metro Vancouver businesses expect to struggle in coming months

More Metro Vancouver businesses expect to struggle over the coming months

Businesses on Robson Street in downtown Vancouver. (Shutterstock)

One way or another, most businesses in Metro Vancouver expect they will further struggle under the worsening inflationary-induced economic conditions and labour shortages, in addition to the earlier pandemic impacts.

According to a new survey by the Greater Vancouver Board of Trade and the Business Data Lab at the Canadian Chamber of Commerce, more than half of business in the region either cannot or are unsure if they can take on more debt. The number of businesses in this challenging cash flow position is expected to climb higher as interest rates increase.

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When it comes to supply chain disruptions, 82% of businesses that expect supply chain challenges over the coming months reported that supply chain challenges have worsened in the past three months, with increased delays in deliveries (81%), increased input prices (78%), and shortages (68%).

Correspondingly, over the next 12 months or more, 40% of businesses expect to experience difficulty maintaining inventory levels, 30% foresee issues with acquiring inputs, products, or supplies domestically, and 43% expect challenges with international imports.

The immense labour shortage in attracting and retaining talent will continue to hamper economic growth. Of the businesses expecting labour challenges, 64% reported it is more challenging to recruit and retain staff than 12 months ago, and the impact of labour-related obstacles is expected to result in management (47%) and existing staff (43%) working increased hours. Nearly four-in-10 (39%) businesses expect recruiting skilled employees will be an obstacle in the next three months along with labour shortages (37%) and retaining skilled employees (30%).

Increased supply chain input and transportation costs and the labour shortage are putting an upward pressure on compensation, which is a cost then passed on to consumers, contributing to inflation. These various rising costs are hurting the ability to reach a profit, with nearly four-in-10 businesses indicating their profits over covering costs will decrease in the next three months.

Overall, 35% of businesses in Metro Vancouver report being in a worse overall position today than in 2019 — higher than the national average of 28%.

More than a third of businesses (37%) expect to further raise their price of goods and services over the next three months, including 71% for retail businesses and 67% for food and accommodation services.

“Inflationary pressures and the surge in fuel prices have significantly increased the cost of doing business and these obstacles, coupled with prolonged labour shortages and supply chain disruptions, have created an increasingly challenging business environment,” said Bridgitte Anderson, president and CEO of the Greater Vancouver Board of Trade, in a statement.

“Considerable economic uncertainty lies ahead, and governments must be mindful of business conditions to ensure that they are not adding costs or burdens onto an increasingly tapped business environment.”

Earlier today, Statistics Canada reported Canada broke its own record from 1983 for year-over-year inflation with a staggering 7.7% increase in May — on top of the 6.8% increase in April.

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