- 59% of respondents reported an uptick in recent, forward-looking indicators (up from 54% in February), while an even higher share (67%) expect sales to accelerate over the next 12 months (a mere 4% expect sales will decline). This suggests businesses are not seeing early signs of a recession in their industries.
- 60% of respondents plan to add jobs over the next 12 months—an indication that the Alberta labour market will likely remain tight, and that higher wage growth could follow.
- 52% of respondents plan to increase investment in machinery and equipment,a notable increase compared to February (40%), while only 19% plan to decrease investment. That result bucks expectations that investment would pull back in the face of higher interest rates.
Looking ahead, hiring constraints remain a hurdle—the majority of respondents (56%) report that they are struggling to meet customer demand because they have a hard time finding enough qualified workers. However, many also report that labour shortages have eased since last year. More significantly, the cost of financing could become a bigger hurdle: 59% of respondents reported more difficulty accessing credit over the last few months.
In June, the Business Council of Alberta conducted its latest Alberta Business Expectations Survey (BES)—a tool to assess recent trends in business conditions and economic expectations in the province. This survey captures the perspectives of BCA’s strongest asset—our member CEOs—whose expectations play an important role in setting the direction of the provincial economy.
Where applicable, we use a “balance of expectations” approach to analyze the data. Effectively, what this means is that we focus on the gap between businesses who think a certain indicator will improve and those who think the opposite. For example, we ask in the survey what businesses expect their employment level to be in the next 12 months: higher, lower, or about the same as it is now. The balance of expectations is the percentage of firms reporting that employment will be higher minus the percentage reporting that it will be lower. The more positive the balance, the more overall optimism we see about future hiring. The more negative the balance, the more pessimism we see.
Sales expectations still strong
- A majority of businesses (59%) saw an increase in their recent, forward-looking indicators (new orders, sales inquiries, etc) in June, up from 54% in February. That increase ends a streak of still-positive, but moderating growth.
- Expectations for future revenue have grown even more optimistic: 67% of respondents expect sales volumes to accelerate over the next year, while 29% expect sales to remain about the same (compared with 55% and 32%, respectively, in February).
- As a result, the balance of expectations is significantly more positive than it was a few months prior: 63% versus 42% in February.
The search for workers continues
- An impressive majority (60% of respondents) continue to report plans to increase staffing over the year, while just 6% expect employment to decrease.
- Unfortunately, a majority (56%) also continue to report difficulty filling the positions needed to meet demand, compared with 44% that say it is not a problem.
- That said, more businesses report labour shortages are improving versus a year ago: 36% report shortages are less intense while just 17% report they are more intense.
Businesses still planning to invest despite higher cost of financing
- Over half of respondents expect to spend more on machinery and equipment over the next year—a 12% point increase versus February. Meanwhile, just 19% expect to cut back.
- As such, the balance of expectations for investment spending jumped from 17% in February to 33% in June.
- As expected given recent interest rate hikes, a majority of businesses (59%) report that terms and conditions for obtaining financing have tightened—a modest increase versus February.
- That pushed the balance of expectations slightly more negative in June, to -53%.
Summary of Results
Altogether, the BES results are encouraging for Alberta businesses and Albertans, especially in the context of expected slower economic growth in 2023. Similar to our February results, there is little evidence of any major cracks in Alberta’s economy. Businesses remain eager to ramp up staffing and invest in their productive capacities, suggesting the province rests on strong economic fundamentals. Nonetheless, the continued search for workers and individuals with certain skills remains an issue, especially to the extent that they are needed to support longer-term economic growth in Alberta.