Business confidence has hit a record low, according to an annual report from the Ontario Chamber of Commerce (OCC).

Just 16 per cent of the more than 1,900 businesses surveyed were confident in Ontario’s economic outlook. That is down from 29 per cent of those polled in fall 2021 and 21 per cent in fall 2020, the report suggests.

“Ontario business confidence has dropped to a record low in 2023. Labour shortages, inflation, health care system vulnerabilities, and forecasts of an economic contraction are dampening confidence in the province’s economic outlook,” Rocco Rossi, president and CEO of the OCC, said in a statement. “Only 16 per cent of organizations surveyed have confidence in the economy. This is down 29 per cent from last year. Promisingly, most businesses feel confident they can withstand these headwinds and continue to grow in the year ahead.”

The seventh annual Ontario Economic Report (OER) also suggests that labour shortages, inflation, health care system vulnerabilities, and forecasts of economic recession are giving business owners cause to pause when it comes to broadening their investments.

Despite the dramatic drop in confidence, the report also claims that 53 per cent of businesses are optimistic, and their growth prospects and expectations of high employment rates and population growth will continue to maintain consumer spending levels.

While that may be true, the report was also highlighted that the confidence gap between small and large businesses was wider than ever, and discussed the importance of support for small businesses that have “fewer resources and flexibility to adapt or take on additional debt,” the report reads.

Stakeholders are calling on the public and private sectors to “invest strategically in productivity, resilience, and long-term growth.”

“Unsurprisingly, labour shortages continue to dominate as a source of concern, directly impacting most employers and 87 per cent of large businesses. Shortages are especially acute in specific sectors such as education, construction, and accommodation and food services,” Claudia Dessanti, senior manager of policy at the OCC, said in a statement.

Furthermore, businesses identified the need for guidance and leadership from the public sector to address issues such as diversity and inclusion, economic reconciliation, and climate action.

“This year’s report shows what we have been hearing from our business customers. While inflation and shortages in labour supply are having an impact, organizations are optimistic about their outlook and growth prospects,” Megan Telford, chief human resource officer at Hydro One Networks Inc. “We remain committed to doing our part, to provide relief to our customers, and make critical energy infrastructure investments to ensure businesses have access to reliable and sustainable electricity when they need it. These investments will be crucial to attract new businesses, create jobs, and help communities grow.”

The report was published in part due to OCC’s landmark partner, Hydro One, and its research partners, Golfdale Consulting and the Bank of Montreal. It was informed by data from the OCC's annual Business Confidence Survey (BCS), which was conducted online from Oct. 10 to Nov. 30, 2022, and received 1,912 responses from organizations across Ontario.

Read the full report here.