Supply Chain Challenges Continue

Statistics Canada

Inflationary pressures, labour challenges, and supply chain issues have impacted businesses differently. Companies continued to expect to face various obstacles over the next three months related to rising costs, hiring, recruitment, and supply chains. Many businesses facing challenges maintaining inventory levels or acquiring inputs, products, and supplies, either domestically or abroad, expected these challenges to worsen in the short term. Over the next three months, half of businesses expected their profitability to remain relatively unchanged, nearly two-fifths expected to increase the prices they charge, and over three-quarters expected their number of employees to stay the same.

Businesses are faced with a variety of obstacles and future unknowns

Businesses expected to face challenges related to rising costs. Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index, decreased 2% monthly in April 2022 and rose 38.4% year over year. This followed an 11.8% increase monthly in March 2022. Meanwhile, average hourly wages for employees rose 3.3% (+$0.99) on a year-over-year basis in April, and energy prices increased 26.4% year over year. The rising cost of inputs, including labour, capital, energy, and raw materials, was the most commonly expected obstacle over the next three months, with 49.7% of businesses expecting it to be an obstacle, relatively unchanged from 50.3% of companies in the first quarter of 2022. The rising cost of inputs was expected to be an obstacle for 75.4% of manufacturing businesses.

Nearly two-fifths (39.3%) of businesses expected transportation costs to be an obstacle over the next three months. This was expected by almost 64.5% of companies in manufacturing. Furthermore, 32.8% of businesses expected the cost of insurance to be an obstacle over the next three months.

Supply chain challenges continue

Over one-quarter (28.2%) of businesses expected difficulty acquiring inputs, products, or supplies domestically. Of these businesses, 57.3% expected these challenges to continue for six months, up from the first quarter of 2022 (52.4%). Meanwhile, 30.8% were uncertain about how long these challenges will persist. In manufacturing, 52% expected difficulty acquiring inputs, products, or supplies domestically over the next three months.

Of businesses that expected supply chain challenges (difficulty maintaining inventory levels or acquiring inputs, products, or supplies domestically or abroad) over the next three months, 67.9% reported that challenges experienced by the business have worsened over the last three months. Leading factors that contributed to worsened supply chain challenges were:

  • Increased delays in deliveries of inputs, products, or supplies (84.1%)
  • Increased prices of inputs, products, or supplies (78.5%)
  • Supply shortages resulting in fewer inputs, products, or supplies being available (75.7%)

While 8.1% of businesses expected supply chain challenges to improve over the next three months, 56% expected the situation to remain constant. Over one-third (35.9%) of businesses expected supply chain challenges to worsen.

Overall position now compared with 2019

Two-thirds (36.9%) of businesses reported that they were in a similar position now compared with 2019. Over one-quarter (27.3%) of businesses said that they were in a better position overall now compared with 2019, led by companies in professional, scientific, and technical services (38.4%) and manufacturing (34.7%). Meanwhile, 27.7% of companies reported being worse than in 2019.

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