Canadian businesses are looking to the long term for better times
Every day seems to bring new uncertainty and more disruption to the markets and trade, with businesses bearing the load on both sides of the border.
Canadian small businesses are looking to the future for more favourable conditions, but for now sentiment is poor, as reflected in the latest Canadian Federation of Independent Business Monthly Business Barometer survey.
It shows long-term small business confidence rising more than nine index points to 34.8 in April, from March’ record low of 25.0. But weak demand is making business tough for now with 55% reporting this.
“The long-term outlook has slightly recovered, but it’s still at abysmal levels. In fact, it’s only reached the March 2020 level of optimism. So, while the business sentiment trended in the right direction this month, partly due to the elimination of the federal carbon tax, small businesses are still feeling worried and uncertain about the future,” said Andreea Bourgeois, CFIB’s director of economics. “We’ve only gone from an extremely pessimistic outlook to just pessimistic.”
Current conditions are not conducive to expansion of workforces with 14% of firms looking to hire and 17% planning to lay off in the next few months. Hiring intentions are typically higher at this time of year.
Those in jobs with small businesses can expect pay to increase by an average 2.2% in the next few months, while consumers will see prices rise by an average 3.5%.
“The cost of doing business is still expensive. The uncertainty caused by the current political environment and the trade war is slowing down consumer spending, leading to fewer sales and lower revenue for many business owners,” Bourgeois said.
South of the border, US business sentiment remains subdued.
The latest reading of The Conference Board Leading Economic Index (released April 20) which stands at 100.5 following a decline of 0.7% in March, which accelerated from the 0.2% decline in February.
The decline for the six month period September-March of 1.2% is almost half that of the previous six months (2.3%), but the overall picture is for slowing economic activity ahead.
"March's decline was concentrated among three components that weakened amid soaring economic uncertainty ahead of pending tariff announcements: 1) consumer expectations dropped further, 2) stock prices recorded their largest monthly decline since September 2022, and 3) new orders in manufacturing softened,” explained Justyna Zabinska-La Monica, senior manager, Business Cycle Indicators, at The Conference Board.
