Outlook of Rural Businesses

Statistics Canada

As high inflation, a record low unemployment rate, and persistent supply chain issues created an environment of uncertainty in the economy, Canadian rural businesses continued to adapt to changing business conditions. This analysis of the Canadian Survey on Business Conditions, third quarter of 2022, examines the evolving practices of rural businesses and their expectations for the future.

Rural businesses concerned about inflation and rising costs

Over three-fifths (62.7%) of rural businesses expected rising inflation to be an obstacle over the next three months. Other common short-term obstacles cited by rural businesses were the rising cost of inputs (52.9%), transportation costs (46.0%), and rising interest rates and debt costs (42.5%). Rural businesses more commonly cited each of these four obstacles than urban ones. However, similar proportions of rural companies (33.7%) and urban businesses (34.1%) planned to increase their prices over the next three months.

Supply chain difficulties are expected to continue

Close to two-thirds (64.3%) of rural businesses expecting supply chain challenges in the short term reported that these challenges had intensified over the previous three months, higher than the 56.7% of urban companies that said the same thing. The factors rural businesses most commonly cited for this intensification were delayed deliveries (85.6%), increased prices (76.5%), and shortages (71.6%) of inputs, products or supplies.

Nearly three-fifths (59.2%) of rural businesses anticipating domestic supply chain issues expected them to continue for at least six months, while 61.4% of rural businesses predicting foreign supply chain issues believed that they would continue for at least six months.

Urban businesses more likely to adopt automation than rural businesses

A smaller share of rural businesses (8.3%) than urban businesses (11.5%) reported that they were somewhat or very likely to adopt automation and digital technologies that may reduce their hiring over the next 12 months. The rural sector with the highest likelihood of reporting these plans was manufacturing (21.5%).

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