It may not be a full-blown recession, but the economy in Metro Vancouver is definitely showing signs of stalling, according to the Canadian Survey on Business Conditions (CSBC), a partnership between Statistics Canada and the Canadian Chamber of Commerce.
Businesses in Metro Vancouver are feeling the pressure of persistent inflation, rising operating costs, rising taxes and labour challenges.
“Consequently, business pessimism in Canada has reached its highest point in two years,” says the Greater Vancouver Board of Trade (GVBOT).
The inflation that economists, central bankers and politicians had assured Canadians would be “transitory,” has now gone on for more than two and a half years now.
The Bank of Canada tries to keep inflation to 2 per cent. In April 2021, inflation hit 3.4 per cent in Canada, and peaked at 8.1 per cent in June 2022. But despite rising Central Bank rates – one of the few mechanisms that can tame inflation -- the inflation rate in Canada in October was still 3.1 per cent.
The CSBC survey found 53 per cent of respondents expect to see increased operating expenses going forward, and 40 per cent are expecting decreased profits.
GVBOT notes the City of Vancouver has added to concerns about costs with a budget that includes a 7.5 per cent property tax hike and increased business licence fees.
“The data is clear that businesses are struggling with affordability considerations in a similar way to individuals, squeezing their finances and making it more challenging to maintain operations, increase wages, or grow,” said GVBOT president Bridgitte Anderson.
A national housing crisis is adding to the pessimism businesses are feeling.
“The Business Data Lab also found a strong correlation between housing (un)affordability and business pessimism, which is highest in B.C. and Ontario,” the GVBOT release notes.
“This also highlights the reason many employers in B.C. are keen to see bold housing policy moves result in more available and affordable housing for workers.”
(This story has been updated to correct the City of Vancouver's property tax hike, which is 7.5 per cent not 7.6 per cent.)
