TEC Canada CEO Confidence Survey
A quarterly survey measuring the confidence of Canadian business leaders of small-to-medium enterprises.
Analysis by:
Dr. Peter Andersen
Economist
The TEC Canada CEO Confidence Survey is sounding an alarm. Recession is now a top-of-mind issue.
Our latest survey was carried out between September 2nd and September 25th. It gives a real time assessment of business sentiment for the small and medium-sized business community. TEC CEOs are now in a position to assess more fully the business risks brought on by the war, inflation and aggressive Bank of Canada interest rate increases.
With a statistically representative sample of 20% of eligible members, the results of the Q4 report offer an accurate glimpse into current business sentiment.
Confidence Index
Highlights

Confidence Index
Discussion
“Use round photo // Inflation is affecting TEC members business in a number of ways. The one that is most cited is increased wage and compensation costs. Employees are pushing to catch up with higher living costs and this in turn is having a second round effect, pushing the cost of production, and hence prices, even higher.”
#See Economic Conditions & Implications.
Mindset & Strategy
There is an even split on the current business mindset/strategy in response to the inflation and interest rate climate. Basically half of those with an opinion (43%) are taking an offensive/optimistic stance. They think that inflation will respond quickly to interest rate increases and that an economic contraction will be short and not very severe.
An approximately equal number (44%) see it the other way. They have a defensive/pessimistic mindset. They expect that inflation will respond slowly to interest rate increases that an economic recession is likely. The remaining 13% of our respondents are in the middle and are not sure how bad it might be.
Weak current economic conditions have increased Canada’s recession vulnerability. TEC CEOs have been aware of this for some time. The majority are giving the same message as in the previous survey. The economy is shaky.
Economic Conditions & Implications
Only a few (23%) sense an improvement from a year ago, less than half in the 2nd Quarter survey. Alberta stands out though with almost half in Alberta (46%) reporting an improved economy over the past year.
Our survey is telling us that we are living in an inflationary world. A strong majority (two-thirds of our respondents) expect prices for their products or services to increase during the next 12 months. This is higher in Quebec at 76%. Hardly any (only 5%) expect their prices to decline.
Nonetheless, profitability is under pressure with the majority expecting it to be either flat (35%) to down (30%). For gross sales revenue, 31% see a flat year ahead and 16% expect a decline. In BC 43% expect a flat year and 11%, a decline.
Weak current economic conditions have increased Canada’s recession vulnerability. TEC CEOs have been aware of this for some time. The majority are giving the same message as in the previous survey. The economy is shaky.
Recession Outlook
Canada’s small and medium sized businesses community is expecting a recession. Most of the TEC CEOs surveyed expect at least a moderate chance of a recession in 2023 or 2024. The issue now is how long and how severe?
Some believe that a recession is a certainty (16%). A large group while not certain, give it a high probability (42%) and an additional 38% see a moderate chance of a recession. That adds up to a large number of respondents (96%).
Six months ago, in our 2nd Quarter Survey, only 30% thought there would be a recession. There were actually more who thought there would not be one.
Inflation Effects
Inflation is affecting TEC members business in a number of ways. The one that is most cited is increased wage and compensation costs. Employees are pushing to catch up with higher living costs and this in turn is having a second round effect, pushing the cost of production, and hence prices, even higher.
The second most cited inflation impact is increased prices from vendors. The supply chain is passing on inflation to others. Following closely behind are increased raw materials prices, and also increased energy and transportation costs. Very few, less than 1%, report that they are not feeling the effects of inflation.
Higher prices are meeting resistance from some buyers, especially in Ontario. At this point, however, this development is not mentioned as frequently in other provinces, as other inflation effects.
Labour Market & Talent Retention
Companies still cannot find workers for ongoing business needs, scheduling work, delivering orders and installing projects. As a result, a majority of TEC CEOs (51%) plan to increase their firms’ total number of employees over the next 12 months. Another 39% plan to keep their employment headcount unchanged. Only 9% plan to reduce employment.
Even if their input costs continue to rise, most (53%) say that they would not respond by cutting back on their payroll budget. In a limited number of cases (11%) cutbacks are already happening though.
There are some others (23%) who are thinking about it and who would cut back if costs keep rising. This percentage is higher in BC at 34%. There have been media reports that some companies, in an attempt to streamline and upgrade employee skills, are laying off other workers as part of this process. Our members do not show such behavior. The large majority (76%) say that they are not laying-off workers as part of any upgrading process. There are some who are laying-off staff as they upgrade but not many (only 19%).
While there is a wide range of labour management strategies, the ones that stand out with TEC CEOs (in order of response) are compensation increases, changes in operational processes and an expansion in remote options. These are the three most frequently mentioned options.
Others on the list with considerable uptake (again in order of importance) include customizing HR strategy based on employee type, creating/expanding mental health benefits and exploring acquisitions to obtain talent.
In Alberta, dropping COVID-19 vaccine mandates is more frequently mentioned strategy response than elsewhere. A relatively small number of firms everywhere are requiring employees to return to on-site work.
In response to cost pressure and worker shortages, a high priority is being put on automation with 38% planning to increase total fixed investment expenditure. This is lower in Quebec at only 27%.
Confidence Index Review Questions to consider
01
Retention
Many TEC leaders say a major impact of inflation on their business is increased wages, however plan on continuing to offer increases to compensation for workers. In what ways can you balance retention strategies with the rising cost of employee compensation?
02
Supply Chain
With the cost of imported raw materials on the rise, what opportunities exist to “localize” your supply chain through domestic suppliers? If your domestic suppliers’ prices are going up, what other operational efficiencies could you leverage in your business to offset this cost?
03
Business Strategy
Thinking about your own business strategy over the last year, how has it shifted? If it has become more defensive, what conditions caused this shift? Does this highlight any potential susceptibilities in your business that may need extra attention in preparation for a downturn?
What Members Had to Say



CEO Confidence Index

Q3 2022 Discussion
Dr. Andersen Discusses the results from this most recent survey // Use image 495x528

Survey Results
Detailed results and historic data reveal the trend on most relevant economic questions // Use image 495x528

About the Report
Dr. Peter Andersen is an independent consulting economist specializing in economic forecasting.
Recession Outlook
Weak current economic conditions have increased Canada’s recession vulnerability. TEC CEOs have been aware of this for some time. The majority are giving the same message as in the previous survey. The economy is shaky.
Q1
Compared with a year ago, have overall economic conditions in Canada improved, remained the same, or worsened?
Q2
During the next 12 months, do you expect overall economic conditions in Canada will be better, about the same, or worse than now?
Q3
Do you anticipate that your firm’s sales revenues will increase, remain about the same, or decrease during the next 12 months?
Q4
Do you expect
your firm’s profitability
to improve, remain
about the same, or
worsen during the next
12 months?
Q5
Are your firm’s total fixed investment expenditures likely to increase, remain about the same, or decrease during the next 12 months?
Q6
Do you expect your firm’s total number of employees will increase, remain about the same, or decrease during the next 12 months?
Q7
Do you expect prices for your product or service to increase, remain about the same, or decrease during the next 12 months?
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TEC Canada CEO Confidence Index
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TEC Canada CEO Confidence Survey
The TEC Canada CEO Confidence Survey is sounding an alarm. Recession is now a top of mind issue.
Our latest survey was carried out between September 2nd and September 25th. It gives a real time assessment of business sentiment for the small and medium sized business community. TEC CEOs are now in a position to assess more fully the business risks brought on by the war, inflation and aggressive Bank of Canada interest rate increases.
With a statistically representative sample of 20% of eligible members, the results of the Q4 report offer an accurate glimpse into current business sentiment.
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- Facilitate group meetings and hold members accountable.
- Provide executive level coaching and guide members to achieve their goals.
- Help members create action plans to tackle issues.
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- Select relevant speakers from TEC’s exclusive database to maximize the impact for your group(s).

Confidence Index Review Questions to consider

Question 1
Many TEC leaders say a major impact of inflation on their business is increased wages, however plan on continuing to offer increases to compensation for workers. In what ways can you balance retention strategies with the rising cost of employee compensation?

Question 2
With the cost of imported raw materials on the rise, what opportunities exist to “localize” your supply chain through domestic suppliers? If your domestic suppliers’ prices are going up, what other operational efficiencies could you leverage in your business to offset this cost?

Question 3
Thinking about your own business strategy over the last year, how has it shifted? If it has become more defensive, what conditions caused this shift? Does this highlight any potential susceptibilities in your business that may need extra attention in preparation for a downturn?
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