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BUSINESS OUTLOOK
> Confidence > Hiring intentions > Office expansions > Market expectations
CONSISTENT CONFIDENCE CALCULATING CONFIDENCE
IN THE CAPITAL’S ECONOMY The business confidence index is a composite calculation based on the
Aresponses to several of mid rising revenues and improving confidence among respondents in the the questions contained market conditions, Ottawa’s hospitality sector rebounded significantly on the following pages. business community is maintaining in 2019. The scale ranges an optimistic outlook with intentions to Confidence among retailers, on the from zero to 200, grow employee headcounts and, in many other hand, dropped significantly for the with a score of 100 cases, expand their physical office space. second straight year. It’s a trend that’s also representing a neutral
Ottawa’s business confidence index held seen nationally, Coletto said, as merchants position. A score higher steady year-over-year, but remains firmly face mounting competition from online than 100 is positive, in positive territory at levels above those recorded between 2013 and 2015. That retailers and rapidly shifting consumer tastes and habits. while a score lower than 100 is negative. suggests a raft of downbeat macroeconomic news – such as trade tensions, rising interest rates and perceptions of a labour shortage – have failed to significantly BUSINESS CONFIDENCE INDEX dampen the mood among local businesses.
“The results are remarkably stable, despite the headwinds that the economy 150 is feeling,” said David Coletto, the CEO of Abacus Data. The local market research firm administered the Ottawa Business 124 125 Growth Survey and analyzed the results. 122 122 “There are no clear red flags … Businesses are feeling upbeat,” he added. 120 114.2 117 119.2
While the overall sentiment is positive, the 2019 Ottawa Business Growth Survey revealed significant differences between respondents in various economic sectors.
Confidence within the construction 90 sector continues to rise, likely buoyed by a raft of megaprojects including the second phase of Ottawa’s light-rail network, the 10- 2013 FALL 2014 SPRING 2015 SPRING 2016 SPRING 2017 SPRING 2018 SPRING 2019 SPRING year renovation of Parliament Hill and a hot housing market. Tech respondents remain the most optimistic out of any industry, although their confidence did fall yearSECTOR BY SECTOR over-year – movement that may reflect the sector’s inherent volatility.
Elsewhere, many in the hospitality SECTOR SPRING 2018 SPRING 2019 CHANGE sector had feared a post-Canada 150 Consulting 126.6 125.4 -1.2 “hangover” characterized by declining visitor numbers in the immediate Technology 141.6 137.4 -4.2 aftermath of the country’s sesquicentennial Hospitality 98.0 103.2 +5.2 celebrations. Those concerns likely contributed to declining confidence in the Construction 128.8 131.6 +2.8 sector last year; with those fears alleviated and visitor numbers holding strong, Retail 103.8 96.0 -7.8
Compared to a year ago, has your confidence in the local economy ...
n INCREASED n STAYED THE SAME n DECLINED 2019
21%
2018
2017
19%
23%
2016
FALL 2015
SPRING 2015
17%
18%
8%
0
HIRING INTENTIONS
Business confidence can be an abstract metric to measure. However, the intention to hire additional employees and expand an organization’s headcount is generally a solid indicator of an optimistic outlook and an expectation of future growth.
In 2019, nearly half of respondents to the Ottawa Business Growth Survey said they plan to recruit new employees, an increase of five percentage points over last year. At the same time, only one in 20 respondents said they planned to downsize.
While hiring intentions are undoubtedly a positive indicator, it’s not clear how many respondents will be able to execute on their growth plans. As noted later in this report, businesses have consistently reported challenges in finding employees in recent years, citing it as one of their top concerns.
20
55%
58%
59%
61%
46%
66%
40 60
23%
23%
18%
21%
36%
26%
80 100
REDUCE NUMBER OF EMPLOYEES
5%
KEEP EMPLOYEE LEVELS THE SAME
38%
RECRUIT NEW EMPLOYEES 49%
I DON’T KNOW / NO COMMENT
9%
SECTOR SNAPSHOT:
ASSOCIATIONS
Ottawa is home to hundreds of regional, national and international associations and not-for-profits – a sector that’s seeing greater experimentation with various business models in an effort to boost membership engagement and trim costs.
Technology is a major driver of this shift, says OTUS Group president Richard MacNeill.
“A lot of organizations are switching to remote or virtual offices, which doesn’t restrict your talent pool to a local geographic area,” he says. “Video conferencing, cloud file storage and accounting – it’s all about creating efficiency and making it less costly.”
A recent survey of sector executives as part of the Ottawa Association Exchange found that membership fees continue to rank as the top revenue source for many organizations, with sponsorships growing in importance.
Looking ahead, MacNeill says he doesn’t see any threats facing the sector on the horizon, although the normal political cycle may cause some organizations to press pause on some of their plans.
“There is a federal election coming up … so advocacy to advance the interests of their membership will be difficult,” he says. “If you’ve got money to spend on advocacy, I would suggest you save it for next year.”
RICHARD MACNEILL, PRESIDENT, OTUS GROUP
SECTOR SNAPSHOT:
FEDERAL PROCUREMENT
Vendors large and small continue to have plenty of opportunities to sell goods and services to the federal government, even as the procurement landscape undergoes significant shifts, says Keith Parker, the president and managing director of the Proposal Centre.
In recent years, there has been a major push for new government contracting vehicles to help streamline the process on both the business and government side, which has caused some confusion.
As businesses in the sector try to catch up to the new advancements, further change and an overall slowdown is expected at the end of the year into 2020 as the federal election grows closer.
KEITH PARKER,
PRESIDENT AND MANAGING DIRECTOR, THE PROPOSAL CENTRE
SPACE TO GROW
Despite the popularity of telecommuting and other forms of remote working, most companies still operate out of traditional leased or owned commercial space. Given the significant investment of time and resources that go into relocation – as well as the multiyear commitment typically required in a new commercial lease – plans for a physical expansion are another key barometer of business confidence.
In 2019, more than a third of respondents said they plan to seek out larger space – up five percentage points over last year.
Thinking about your organization’s commercial space, do you plan over the next five years to:
STAY THE SAME
57%
EXPAND ITS PHYSICAL FOOTPRINT BY MOVING TO A LARGER SPACE OR EXPANDING
36%
DOWNSIZE ITS PHYSICAL SIZE
7%
MARKET EXPECTATIONS
Even the best-run businesses can face challenges if overall demand for their products or services is soft. While innovative companies can often find new ways of delivering value to customers, market conditions have a significant impact on business confidence.
In 2019, slightly more than half of all respondents said they expect market conditions to improve – the same proportion as last year.
Over the next year, do you expect the market for your business sector to ...
n IMPROVE n STAY THE SAME n WORSEN n I DON’T KNOW / NO COMMENT
2019
2018
2017
2016
FALL 2015
SPRING 2015
