An excess supply of labour remains
At the time of the survey substantial excess capacity remained among businesses hit hard by the pandemic, even while reports of capacity pressures reached their highest level on record (Chart 3). Many firms said that labour-related constraints would cause some or significant difficulties in meeting an unexpected increase in future demand. But the number of firms stating they have actual labour shortages limiting their ability to meet current demand remains modest (Chart 4, blue bars). Indeed, several businesses, often those tied to high-contact services, continue to report an excess supply of labour.
Businesses reporting labour-related constraints linked them to:
- difficulties finding skilled or specialized labour (e.g., skilled trades, information technology or sales professionals), a situation they expect to persist
- the pandemic, including constraints caused by travel restrictions and government support programs for workers
Although the share of firms with labour shortages remains low, many businesses reported that the intensity of labour shortages has increased from extremely low levels 12 months ago (Chart 4, red line). These results on labour shortages and labour shortage intensity suggest that slack remains in labour markets but is being absorbed.
Firms reporting other capacity pressures mentioned supply chain frictions as a key bottleneck to production. Supply issues were cited across a wide range of raw materials and finished goods. These frictions are often tied to constraints on shipping capacity and are more common than before the pandemic. Most firms expect these constraints to persist until at least the end of 2021.