Survey reveals sentiment is weaker than during the great financial crisis, 9/11, or Covid
Canada’s small business owners are a resilient bunch, but with the economic and geopolitical landscape in turmoil, sentiment has reached an all time low according to a trusted survey from the Canadian Federation of Independent Business (CFIB).
Its Business Barometer long-term index reveals an all-time low of just 25.0 having slumped 24.8 points in March compared to the previous month. Any score below 50 means the share of owners expecting their business's performance to be weaker over the next three or 12 months outnumber those expecting stronger performance.
To put that score into context, confidence is lower now than it was during the great financial crisis, 9/11, or the Covid pandemic, as uncertainty around tariffs and the impact that may have on the wider Canadian economy weighs heavily on owners’ minds.
Insufficient demand is cited by 59%, a new historical high that eclipses the previous high of 53% during the pandemic.
"Small business owners are feeling pessimistic about their business's perspectives for the next few months or even beyond. It's hard to make critical decisions for the long, medium or short term when so much can change within a matter of hours," said Simon Gaudreault, CFIB's chief economist and vice-president of research. "No one knows when the tariff war will end, and businesses are worried the worst is yet to come."
Previous research by the CFIB found that almost two thirds of businesses said they are already impacted by the trade war with the US, while a quarter are not yet impacted, and 12% are unsure.
Consumer impact likely
The weakened sentiment is set to mean higher prices for consumers, which will impact inflation. The average price increase that small business owners say they are planning is 3.7% compared to 3.0% in February. This is the largest month-over-month increase since the pandemic.
Meanwhile, wage increases are slowing with the average of 1.9% in March dropping from 2.2% in February. Hiring intentions are also weak at just 11% of respondents, while 19% are planning layoffs.
Confidence is weaker across all provinces and sectors, although hospitality (17.0), manufacturing (18.6), transportation (21.0), and agriculture (21.3) have the lowest levels.
"Business confidence is at abysmal levels. If this doesn't send a strong warning signal to policymakers that businesses urgently need all the help they can get to weather this storm, including a much-improved business environment here in Canada, then I'm not sure what will," said Corinne Pohlmann, Executive Vice-President of Advocacy at CFIB. "Now is the time to show strong support to small businesses. Taking proactive actions, such as making carbon tax rebates for small businesses tax free, adopting full mutual recognition right across Canada, increasing the lifetime capital gains exemption, and ensuring there are supports that are accessible to small businesses to help them through this challenging ordeal would significantly boost confidence at a time when small businesses need it the most."
