A “scarcity mindset” and a sense of “permacrisis” have resulted in the confidence of Ottawa business owners dipping close to levels seen only in 2020 at the outset of the pandemic.
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A “scarcity mindset” and a sense of “permacrisis” have resulted in the confidence of Ottawa business owners dipping close to levels seen only in 2020 at the outset of the pandemic.
This was one of the findings of the 2024 Welch LLP Business Growth Survey, produced by the Ottawa Business Journal and the Ottawa Board of Trade.
The business confidence index for 2024 decreased to 98 from 108 in 2023. This year’s result is the lowest since 2013, when the survey started, except for 2020, when it was 78. The highest result was seen in both 2017 and 2022 at 125.
The confidence index is based on six questions that ask business owners about their revenues, net income, future market expectations, access to credit, hiring intentions and their level of confidence in the local economy. The 2024 survey, conducted in February and March of 2024, received hundreds of responses from local business owners.
David Coletto, CEO and founder of Abacus Data, which conducted the survey, said the results reflect a “scarcity mindset” and sense of “permacrisis” among Ottawa businesses.
“The confidence index saw a dip in the pandemic year in 2020, then a rebound, but now we’re close to an all-time low,” Coletto said. “When we look at the data, we say that over 100 is a net positive and below is a pessimistic environment,” Coletto explained.
“The index has been above 100 from 2013 to 2019, 2013 being the year we first started the survey, and 2020 was the lowest. There was a rebound, but now we’re seeing the second-lowest score since 2013.”
Of the major sectors with large enough sample sizes, the index saw large shifts in confidence. Specifically, confidence decreased from 2023 in professional services, hospitality, construction and retail sectors.
“To highlight hospitality, they’ve been on a rollercoaster,” said Coletto. “There was a huge drop obviously during the pandemic, a slower rebound, and it felt really possible to rebound heading into 2022 and, to some extent, in 2023. But now I suspect they’re feeling the effects of that scarcity mindset.”
The only major sector surveyed that saw an increase in confidence was technology.
Overall, the percentage of respondents saying their revenues and net income had increased in the past year was lower than in 2023. The percentage who said their future market expectations had improved was also down, coming in at 39 per cent versus 57 per cent in 2023. Only 35 per cent plan to hire in the next 12 months, compared to 43 per cent last year. The percentage of respondents who said credit was harder to access jumped to 30 per cent in 2024 from 13 per cent in 2022, although this was a slight improvement from 2023 at 32 per cent. Finally, the percentage of respondents who said their confidence in the local economy had increased dipped to 13 per cent from 16 per cent in 2023 and 23 per cent in 2022.
The depressed hiring plans reflect a hesitancy on the part of businesses to grow their teams, Coletto explained.
“For many, many years, businesses were signalling a plan to grow,” he said. “But other than our pandemic year, 2020, this year’s (employment plans) is the lowest it’s been.”
The sentiments in the survey are consistent with Canadians as a whole, Coletto said.
“Broadly speaking, when you ask people what's keeping them up at night … It’s similar to what’s keeping business leaders up at night,” he said. “There’s this feeling that we’re in a state of permacrisis, which is a feeling of instability and insecurity, and an inflationary crisis.
“That has a big effect on how consumers view their world … and ultimately how business leaders are navigating their environment.”
The full Welch LLP Business Growth Survey report can be downloaded here.
