MNI BRIEF: Firms See Supply Chains Worsening Again- StatsCan

Some Canadian firms see supply chains worsening again as inflation remains a top concern according to a survey Monday from the federal statistics office, underlining the central bank's challenge figuring out if monetary policy is tight enough.

Among businesses facing supply chain challenges, 23% expect them to worsen over the next three months, according to the Statistics Canada survey taken in July and early August. That's up from 15% in the previous quarterly survey. For those executives facing bottlenecks, 36% said they had worsened in the last three months, up from 30% in the last survey.

Signs of renewed bottlenecks run against recent policymaker comments the economy is normalizing. The BOC is expected to pause rate hikes next week on signs its 10 moves so far will be enough to rebalance supply and demand. (MNI INTERVIEW: BOC Can Wait On Rate Hike- UofT Researcher) The survey also found 43% of firms said higher rates are a business obstacle.

The report's findings were uneven and showed fewer firms expect supply chain challenges. The share saying yes on that question declined to 19% from 23%. Narrower but more intense inflation lines up with the Fed's focus on "supercore" inflation that former BOC deputy Sylvain Leduc told MNI may also be a concern in Canada. (See: MNI INTERVIEW: Risk Of Clunky Supercore Unwind- SF Fed’s Leduc)

Inflation remained the most commonly expected obstacle by businesses over the next three months, cited by with 57% of respondents and little changed from the last survey. Over the next three months, 26% of businesses expect to raise prices, similar to 28% during the second quarter survey.