Capacity pressures have eased from high levels
The share of firms reporting capacity pressures has moderated. Although still above pre-pandemic levels, the number of businesses reporting labour and supply chain bottlenecks as obstacles to meeting an unanticipated increase in demand has declined (Chart 6). This suggests that the gap between demand and supply is narrowing.
Many businesses reported that their supply chain issues have improved compared with three months ago. Relative to earlier in the year, fewer firms are expecting to experience sales losses from supply chain frictions. Roughly half of businesses surveyed think most issues will be resolved by the end of 2023. Still, almost one in four firms sees supply chain challenges as an obstacle to meeting an unexpected rise in demand.
As demand softens, a growing number of firms characterize labour shortages as less intense than last year, signalling an easing in some labour markets. Nonetheless, the share of businesses that reported binding labour shortages remains above the historical average. Firms with difficulties finding workers continue to attribute these issues to temporary factors (e.g., strong cyclical competition for labour) and structural changes (e.g., the aging population, shifting occupational preferences away from skilled-trade jobs such as those in construction, transportation and natural resource industries).