Business confidence in Canada’s largest province is on the decline.
A little more than half of Ontario businesses (54%) report confidence in their organization’s economic outlook, reveals an annual economic report from the Ontario Chamber of Commerce (OCC). That compares to 62% in last year’s report.
Further, declining confidence in Ontario’s overall economic outlook has been observed since 2012. At that time, business confidence in the economy was at 47%; this year it’s half that, at a low of 23%. (Confidence in Ontario’s economy was at 24% in last year’s report.)
“Industry in Ontario is feeling the impact of a rising minimum wage and substantial labour reforms, increasing global and U.S.competition, NAFTA renegotiations, consistent overregulation, rising input costs (particularly, electricity) and a tax system that is unable to relieve these pressures,” says Rocco Rossi, president and CEO at the OCC, in the report.
Rising input costs are a key concern, as they were cited by almost two-thirds of businesses as a reason for lack of confidence. Beyond electricity, those costs include such things as taxes and raw materials.
Declining revenues for 2018 are forecast by one-quarter of small businesses in Ontario—that’s twice the rate of large firms. For instance, the increase in the minimum wage is expected to be a negative factor, say 68% of businesses.
“Given that the majority of businesses in this province are small, this will likely have a net-negative impact on economic growth,” says Rossi.
More dependence on financial activities
An ongoing concern is that the production of goods and services represents a shrinking contributor to business prosperity in Ontario.
Production activities represent only 15.3% of business prosperity, meaning that prosperity is increasingly becoming more dependent upon financial activities instead of productive activities.
“This is indicative of Ontario possessing a higher-risk operating environment,” says Rossi.
In the report, the OCC outlines its successes of 2017, one of which is advocacy for financial literacy. In its budget last year, the Ontario government reiterated its support for financial literacy in high schools past the pilot stage.
Read the full report.