- 81% of respondents reported an uptick in forward-looking indicators—things like new orders, advance bookings, and sales inquiries.
- 74% of respondents expect to increase employment over the next year, similar to 73% in the November survey.
- 58% plan to increase investment in machinery and equipment, while only 12% plan to make cuts.
As was true in our November 2021 survey, hiring constraints continue to be a challenge. Almost three-quarters of respondents (74%) report that difficulty finding workers is limiting their ability to meet customer demand. Also, we know from member businesses that higher input prices are also a challenge. Of note, this survey was conducted before Russia’s invasion of Ukraine. In addition to the direct harm to Ukraine and its people, the invasion is creating massive geopolitical uncertainty and driving up prices for key products like energy and food. These developments could have a significant impact on the economic outlook for Alberta in the months ahead.
In February, the Business Council of Alberta conducted its sixth 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.
In our last survey conducted in November, respondents showed strong optimism in their outlook for future sales, hiring, and investment. This was encouraging to see even in the midst of continued uncertainty about the path of the virus; the announcement of Alberta’s Restrictions Exemption Program; and ongoing supply chain and inflation issues.
Since then, restrictions have eased and hospitalizations have declined. However, supply chain and inflation issues remain as challenging as before; and the Bank of Canada has begun raising interest rates in response.
In spite of these ongoing challenges, our survey shows that business expectations over the next year remain positive: sales continue to recover; and businesses are eager to increase their staff complement over the year. Also encouraging, the survey shows a continued uptick in investment spending expectations.
That said, the invasion of Ukraine, which occurred after our survey was conducted, adds a new layer of uncertainty on the year ahead. Beyond the direct toll on human suffering, there will likely be an ongoing shock to global markets as Russia is cut off from most of the world in terms of money and trade, which is likely to weigh heavily on the the cost of commodities and energy security.
Sales expectations remain strong
Respondents continue to report an improvement in forward-looking indicators—things like new orders, advance bookings, and sales inquiries that signal anticipated future economic activity. And, likewise, they remain optimistic about their expectations for future sales (when compared with the last year). Though responses have moderated slightly from the last survey, it is worth noting that, at this point, many businesses are already at—or even above—their pre-COVID sales. This means we will likely see some moderation in these responses as more and more businesses see a full recovery.
- An impressive 81% of respondents reported an uptick in forward-looking indicators (compared with 93% in our November survey).
- 79% of respondents expect sales volumes over the next year to accelerate compared to the last year—roughly in line with our last survey—while 18% expect sales to remain flat.
- Overall, there is a strong positive balance of expectations of 75% for future sales activity, while just 4% expect things to slow.
Employers continue to search for more workers to increase workforce
A large majority of respondents plan to increase their workforce this year, even as filling open positions remains a challenge. 74% of respondents said labour shortages are more of a problem than they were a year ago. Furthermore, about three quarters of respondents said that the inability to find qualified workers is impacting their ability to meet customer demand. While there are likely a number of factors at play, the fact that unemployment still remains elevated continues to highlight the discrepancy between the skills many Albertans possess and those that employers are looking for. Encouragingly, the Government of Alberta has recognized the importance of workforce development in Budget 2022 with the announcement of the Alberta at Work initiative. Though the impact may take time to manifest in our survey, they have allocated $600M in new money over the next three years to create pathways for Albertans to fill gaps in the labour market.
- 74% of respondents expect to increase employment over the next year, similar to November’s results, while 26% expect employment to remain flat, and no respondents expect to reduce staffing
- 74% of respondents reported more intense labour shortages compared to a year ago, a 12% increase from the November survey.
- About three-quarters (74%) of respondents reported difficulty filling the positions needed to meet demand, similar to our previous survey.
Investment expectations are encouraging but recent events highlight ongoing uncertainty
We continue to see a steady increase in business investment expectations, an encouraging sign of future growth for the province. As of this latest update, investment intentions were strongly positive with 58% planning to increase, and just 12% planning to dial back, investment spending. That said, uncertainty is likely to have grown even just since the survey was conducted due to the recent events in Ukraine. For businesses where oil and gas is a key input, for instance, rising prices could limit their ability to make large-scale investments.
Meanwhile, credit access is improving for some and becoming more of a challenge for others. Though a majority of respondents report conditions have not changed (63%), there were more businesses who reported improvements and more who reported challenges than in November. As we noted in November’s update, this is something to keep an eye on in the coming months, especially as equity markets face a great degree of uncertainty and the Bank of Canada begins to raise interest rates.
- 58% of respondents expect to spend more on machinery and equipment—up from 44% last survey—over the next year, while just 12% expect to spend less.
- Due to an increase in respondents expecting to spend more, the balance of expectations from November to February increased 10%.
- On balance, respondents noted that access to financing improved slightly, but remains negative (-7%).
- While most respondents report that their ability to access financing has not changed, 22% believe it has become more difficult, while 15% say it is getting easier.
Summary of Results
Overall, this is encouraging news for Alberta and for the province’s continued economic recovery. The biggest challenge ahead will be solving for the labour shortages. It will be incumbent upon the plan outlined in Budget 2022 and the work of government and civil servants to get it right—in both the short and long-term. Beyond this, there is a cloud of uncertainty across global markets as the NATO countries respond to Russia’s invasion of Ukraine. While we might have come into 2022 thinking uncertainty would start to fade, it’s starting to feel more like the new normal.