Inflation impacting pandemic recovery, survey shows
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A new survey shows that while a solid percentage of Manitoba businesses say their revenues are back to pre-pandemic levels, inflationary pressures have thrown a wrench into the pandemic recovery celebrations.
The Manitoba Business Outlook Survey produced almost annually by Leger for the Manitoba Chambers of Commerce, shows that while 70 per cent of Manitoba business leaders indicate they are near or have exceeded pre-pandemic revenues, the recovery has not materialized evenly across business sectors and business sizes.
Not only that, but the level of optimism about whether or not the province is headed in the right direction is more than 10 percentage points below where it was in the fall of 2021.
As well the 379 respondents to the survey that was in the field from late November to mid-December were 10 per cent less likely to agree that Manitoba’s business climate is competitive with other provinces than they were a year ago.
Chuck Davidson, the CEO of the Manitoba Chambers of Commerce, said some of that disparity has to do with the timing of the survey.
“When we did the last survey we were heavy into COVID but there was real optimism with the vaccine and people thought they could see the end of the horizon,” Davidson said. “Then, coming out of that we’ve now been hit with inflationary pressures, supply chain challenges, workforce challenges. I think there is a little frustration setting in.”
Margot Cathcart, the CEO of the Rural Manitoba Economic Development Corporation said the inflationary pressure that have forced businesses to make some critical decisions has created a “uncomfortable spiral”.
Close to 50 per cent of respondents said they are reducing costs internally, and 45 per cent are say they are passing on costs to consumers.
“Everybody is feeling the same pressures around inflation costs and that is compounded by labour shortages,” she said.
Those labour shortages – which, including employee retention, remain as the top worry over the next six-to-12 months – have left 40 per cent of workforces feeling overworked, another concerning trends.
“One out of every two business leaders feel that access to skilled labour in Manitoba has worsened over the past year,” said Davidson. “The problem is even more critical for small and medium sized businesses where that number increases to 65 per cent.”
Andrew Enns, executive vice-president for Central Canada for Leger, who has been conducting these surveys for the Manitoba Chambers of Commerce for several years, said while 70 per cent are saying they are at or ahead of pre-pandemic revenues is not bad, the optimism breaks down when you look at the different sectors.
“The professional services, technology and communications companies are certainly much further ahead of things with 76 per cent saying that are at or better than pre-pandemic levels, others still have ground to make up,” he said.
The survey showed that only 55 per cent of the restaurant, hospitality, tourism and recreation businesses have got back to former levels.
“No question that is what we are hearing,” Davidson said. “We knew they would take the longest to recover.”
But he said the barriers to their recovery now include increased costs that were not anticipated a year ago.
“There was plenty of talk about getting through the pandemic and all folks wanted to do was be open and things would return to normal,” he said. “Then they were hit with inflation and workforce challenges. One of the biggest challenges has been dealing with increased cost pressures.”
Business leaders expressed concern that the continued ongoing labour shortages are also having a considerable impact on their existing workforce and operations. Two out of every five business leaders indicated that their teams feel overworked, 36 per cent have felt obligated to increase wages, and 30 per cent indicated they are not able to expand their business or organization.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.