After collectively taking a financial hit during the pandemic, confidence among Ottawa’s business leaders is on the rebound amid growing optimism that market conditions will improve over the next year.
Ottawa’s business confidence index – a composite calculation based on insights from business leaders collected as part of the Welch LLP Ottawa Business Growth Survey – crept back into positive territory during the first half of 2021 in a partial recovery from the shock that the COVID-19 pandemic initially sent through the economy roughly a year earlier.
“We continue to see signs of recovery in the marketplace with more businesses operating in a semi-normal mode,” says Jim McConnery, partner at Welch LLP. “This includes increasing consumer demand in sectors of the economy, such as travel and hospitality, that were hit the hardest by the pandemic restrictions.”
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Elsewhere, the majority of business owners say they’re in a weaker financial position than a year earlier, with lower revenues and net income. Nevertheless, there was a sharp rise in hiring intentions – an indicator of an optimistic outlook and expectations of future growth – and a sharp decline in the number of organizations saying they plan to reduce their headcount.
“The worst of the pandemic is likely to be over in the next few months,” says David Coletto, the CEO of Abacus Data. The local market research firm administered the 2021 Welch LLP Ottawa Business Growth Survey and analyzed the results.
“Large parts of our economy are bouncing back. Confidence is rising and we’re getting closer to the light at the end of the tunnel,” he adds.
Noting that the survey was largely conducted while Ontario was grappling with a third wave of COVID-19 infections, Coletto highlights that not all industries are seeing that proverbial light.
While the construction and technology industries have a highly optimistic outlook, the attitudes of those in the retail and hospitality sectors – arguably two of the industries most severely affected by measures aimed at controlling the spread of COVID-19 – were considerably more downbeat.
“For the business community, the past year has been – depending on your sector – one of crisis, or change and adaptation,” Coletto says. “The survey really highlights both the struggles that companies have faced over the past year and how many in the city are going to change how they do business.”
A tale of two economies
While some in Ottawa’s business community believe the worst economic impact of the pandemic is behind them, other industries face a prolonged recovery.
“Some industries are dealing with supply issues – for example, car dealers who are having trouble acquiring inventory to meet strong consumer demand,” adds McConnery. “Ideally these supply issues get resolved over the next few months as business activity continues to return to normal.”
Business confidence by sector:
Industries tied to housing and household goods, such as those that provide construction, financial and real estate services, as well as building materials, appliances and food are expected to fuel economic growth over the short term, says RBC regional vice-president Andrew Arnott.
In Ottawa, manufacturing sales have surpassed pre-pandemic levels in recent months and the housing market is growing faster than virtually any other Canadian market.
“Sectors like wholesale and transportation are reporting capacity pressures and labour shortages and therefore need more investment to hire to increase productivity,” says Arnott. “But businesses that are tied to high-contact services – such as tourism – and pockets of non-essential retail are still reporting sluggish demand and much lower levels of activities.”
Read the full 2021 Welch LLP Ottawa Business Growth Survey report by clicking on the cover below: