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February 26, 2024SURVEY ON BUSINESS CONDITIONS: Q1 2024 Statistics Canada has conducted its 15th iteration of the Canadian Survey on Business Conditions. In January and early February, Statistics Canada surveyed businesses to collect information on businesses' expectations, obstacles, plans and practices.
The results reported here are a selection of the impacts found for Nova Scotia businesses, by industry, by size of business (measured by number of employees), by age of business and by urban or rural location. There are comparisons of the Nova Scotia average (all industries, ages, sizes, locations) with the national and provincial averages. The horizontal axis in all charts measures the share of businesses reporting each outcome. The total for many outcomes does not add to 100% of respondent businesses as many replied that the outcome was not applicable in their circumstances.
Future outlook over the next 12 months
In Nova Scotia, 26.8% of businesses were very optimistic about the next 12 months; a further 49.0 % were somewhat optimistic, 11.5% were somewhat pessimistic and 2.0% were very pessimistic.
Business optimism was lower (and pessimism higher) at the national level. The Atlantic Provinces enjoyed more optimistic outlooks.
Revenues
When asked about changes in revenues from 2022 to 2023, 42.2% of Nova Scotia business reported rising revenues and a further 34.0% reported stable revenues. Revenues were down for 23.8% of Nova Scotia businesses. Rising revenues were more prominent for arts/recreation, administrative/support/waste management and retail businesses. Declining revenues were notably more prevalent in agriculture/forestry/fishing, manufacturing, transportation and real estate industries.
Business expectations for the next three months
The outlook for employment was stable for 85.1% of Nova Scotia businesses in the next three months. Rising employment is expected among 10.2% of Nova Scotia businesses while declining employment is expected by 4.7% of Nova Scotia businesses. Rising employment was most commonly reported by businesses in Nova Scotia's manufacturing industries.
56.8% of Nova Scotia businesses expect stable job vacancies (53.5% nationally) while 6.2% expect rising job vacancies and 6.0% expect falling vacancies. Expectations of rising vacancies were more prevalent in Nova Scotia's construction and health/social (including daycare) industries. Across Canada, 4.8% of businesses expect rising job vacancies and 6.4% expect falling vacancies.
Rising sales were expected by 21.1% of Nova Scotia businesses while a further 62.0% expect stable sales. Declining sales were expected by 13.0% of Nova Scotia businesses. Rising sales were more commonly expected by businesses in Nova Scotia's manufacturing, wholesale, retail, information/culture and finance/insurance industries.
Rising prices were expected by 27.5% of Nova Scotia businesses while 64.6% expected stable prices. Only 4.0% expected price declines. Rising prices were notably more widely expected in Nova Scotia's manufacturing, retail, wholesale, transportation, real estate, professional/technical services, arts/recreation and accommodation/food services industries.
Stable demand was expected by 67.9% of Nova Scotia businesses expected stable demand while 21.8% expected a rise in demand and 10.3% expected a fall in demand. Rising demand is more widely expected among Nova Scotia's administrative/support industries as well as in health/social/daycare services, professional/technical services, information/culture, wholesale, manufacturing and construction.
Across Canada, rising demand is expected by 20.0% of businesses while falling demand is expected by 14.3%.
Business profitability is expected to remain the same for 55.6% of Nova Scotia businesses in the next three months while 14.0% expect rising profitability and 28.1% expect decreasing profitability. Rising profitability is expected more in Nova Scotia's administrative/support, retail, wholesale, manufacturing and accommodation/food services industries. Decreasing profitability expectations were more prevalent in Nova Scotia's real estate/leasing and transportation businesses.
Rising operating income was expected by 24.9% of Nova Scotia businesses while 59.7% of Nova Scotia businesses expected stable operating income in the next 3 months. Falling operating income was expected by 15.4% of Nova Scotia businesses. Rising income was more commonly expected among real estate, manufacturing, wholesale and administrative/support services businesses in Nova Scotia. Falling income was more commonly expected by Nova Scotia's accommodation/food, finance/insurance and retail businesses. Stable operating income was notably less prevalent in retail business expectations.
Operating expenditures were expected to rise among 45.6% of Nova Scotia businesses while stable operating expenditures were anticipated by 50.0% of Nova Scotia businesses. 4.3% of Nova Scotia businesses expected declining operating expenditures in the next three months. Rising operating expenditures were most commonly cited in real estate/leasing businesses, while administrative/support businesses were most likely to expectations of falling operating expenditures.
Rising cash reserves were expected by 7.6% of Nova Scotia businesses while 59.5% expected stable cash reserves. A further 24.8% of Nova Scotia businesses expect declining cash reserves. Rising cash reserves were more commonly expected among administrative/support businesses in Nova Scotia. Falling cash reserves were a more common expectation for manufacturing, transportation and information/culture industries.
Stable capital expenditures are anticipated by 57.6% of Nova Scotia businesses while 22.4% expect rising capital expenditures and 5.9% expect declining capital expenditures.
Only a small percentage of Nova Scotia businesses (3.9%) expect reductions in training expenditures. Rising training expenditures were anticipated by 14.5% of Nova Scotia businesses and stable training expenditures were expected by 52.8% of Nova Scotia businesses. Training expenditures were not applicable to 29% of Nova Scotia businesses.
Stable marketing and advertising expenditures were expected by 51.5% of Nova Scotia businesses, with 12.0% expecting rising marketing/advertising spending and 5.6% expecting falling marketing/advertising expenditures. Marketing expenditures were not applicable to 30.9% of Nova Scotia businesses.
Although research and development (R&D) expenditures were not relevant for 64.0% of Nova Scotia businesses, 26.5% expected stable R&D spending and a further 6.9% expected rising R&D spending. Only 2.7% of Nova Scotia businesses anticipating reductions in R&D spending.
The vast majority of Nova Scotia businesses participate neither in imports (not applicable to 77.2% of businesses) nor in exports (not applicable to 81.4% of businesses). Stable or rising imports were expected by 21.2% of Nova Scotia businesses (2.7% expect falling imports) while stable or rising exports were expected by 18.2% of Nova Scotia businesses (0.4% expect falling exports).
Obstacles for businesses
As part of the Survey of Business Conditions, businesses were asked about their obstacles. 19.7% of Nova Scotia businesses reported no substantial obstacles expected in the next three months (down from the previous quarter). Businesses in Nova Scotia's mining, finance/insurance, health/social/daycare services, and professional/technical services were more likely to report no substantial obstacles. Across Canada, 17.4% of businesses reported no obstacles.
44.8% of Nova Scotia businesses reported some labour-related obstacles. These were most prevalent in Nova Scotia's construction and administrative/support industries (including call centres) as well as among larger emloyers. Nationally, labour-related obstacles were reported by 39.4% of Canadian businesses, led by businesses in Quebec and Nova Scotia.
Labour force shortages (29.3%) and recruiting skilled employees (30.1%) were the most common labour-related obstacles reported, followed by retention of skilled employees (26.8%).
Supply-chain issues were reported as business obstacles by 17.1% of Nova Scotia's businesses, particularly in goods-producing industries as well as arts/recreation and accommodation/food services. The prevalence of supply chain related obstacles has fallen since October-November survey results.
Domestic input sourcing was the most widely reported supply chain business obstacle (11.3% of Nova Scotia businesses), compared with international input sourcing (5.1% of Nova Scotia businesses) or maintaining inventory (8.9% of Nova Scotia businesses). All three obstacles are less widely reported than in recent iterations of the Survey of Business Conditions.
The most acutely-felt obstacles in Q1 2024 were cost-related. This category was reported by 69.9% of Nova Scotia businesses with the largest prevalence in accommodation/food, manufacturing, retail, information/culture, personal/repair and transportation industries.
Rising inflation was the most commonly cited business obstacle, reported by 51.7% of Nova Scotia businesses. This obstacle was most commonly reported by accommodation/food and manufacturing businesses.
Among specific cost obstacles, input costs (45.3%) were the most commonly cited obstacle. However, there were substantial numbers that also reported obstacles from insurance costs (36.0%), transportation costs (30.5%), interest/debt service costs (37.5%) and property/real estate costs (24.5%).
Market conditions were less commonly cited obstacles. Insufficient demand was reported as an obstacle by just 12.3% of Nova Scotia busineses. Fluctuating demand was noted as an obstacle by 22.1% of Nova Scotia businesses. Increasing competition was cited by 17.0% of Nova Scotia businesses as an obstacle.
Cash flow and debt management were identified as an obstacle by 20.6% of Nova Scotia businesses - especially in manufacturing, construction, information/culture, transportation, arts/recreation and accommodation/food service industries.
Financing was cited as an obstacle by just 8.9% of Nova Scotia businesses.
When asked what was the one most pressing obstacle for Nova Scotia businesses (across all industries), rising inflation (14.4%) and input costs (10.5%) were the most widely reported.
Remote work accounts for the minority of working arrangements. In Nova Scotia 83.5% of businesses expect their staff to work on-site exclusively or most hours. Less than 7% anticipate that work will be exclusively remote - though remote work is higher in mining, wholesale trade, transportation, information/cultural industies, real estate/leasing, professional/technical services and administrative/support industries.
When asked about plans for using generative artificial intelligence (AI), only 8.1% reported current use of AI. A further 5.2% planned to adopt AI tools while another 9.0% were considering adoption of AI tools. Use of AI was notably higher in information/cultural industries as well as in finance/insurance, professional/technical services and administrative/support industries. Construction as well as personal/repair services reported the least use of AI.
Source: Statistics Canada. Table 33-10-0790-01 Future outlook over the next 12 months, first quarter of 2024; Table 33-10-0778-01 Business revenues in 2023 compared with 2022 revenues; Table 33-10-0770-01 Business or organization expectations over the next three months, first quarter of 2024; Table 33-10-0772-01 Business or organization obstacles over the next three months, first quarter of 2024; Table 33-10-0773-01 Most challenging obstacle expected by the business or organization over the next three months, first quarter of 2024; Table 33-10-0784-01 Business's use of Generative AI, first quarter of 2024
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