CFIB's Business Barometer shows continuing trend of weakening confidence
Canada’s small and medium sized businesses remain under pressure and sentiment has slumped to its lowest since the pandemic began in early 2020.
The Canadian Federation of Independent Business’ monthly reading of how Canada’s small business owners are coping fell another 1.5 points in October to 47.2. Not only is this the lowest since April 2020 but it’s the third lowest reading in 15 years.
Quebec and Ontario have the lowest sentiment according to the Business Barometer with readings of 46.1 and 46.5 respectively, but all provinces saw confidence decline.
“While our Main Street Quarterly forecasts indicated last week that the economy will narrowly avoid a recession in the second half of this year, many signs still point to a lot of trouble for small businesses. We’re hearing from many businesses that they’re at full capacity and busy, but they’re not making a profit either. Inflation, financial pressures, labour challenges, uncertainty: name a business challenge and it’s happening in Canada right now,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research.
There is some better news though with businesses’ average price and wage plans improving improvement throughout 2023. They were 3.0% and 2.9% respectively in October. The survey took place before the BoC revealed its latest interest rate pause which will also provide some relief for businesses.
Business concerns
But there are other concerns for small business owners.
The survey shows elevated levels of concern about occupancy (29%), borrowing (44%), insurance (56%) and wage (66%) costs. And labour shortages continue to impact productivity and growth.
Meanwhile, 43% of respondents reported insufficient domestic demand, up from 39% in September.
“While the softening of the labour market as well as wage and price plans bring good news on the inflation front for businesses struggling to keep up with high costs, our different business indicators show their outlook remains quite difficult,” said Andreea Bourgeois, Director of Economics at CFIB. “And small businesses are very much wondering about what the next few months have in store, especially with the ongoing geopolitical situation and the looming Canada Emergency Business Account (CEBA) repayment deadline being less than three months away.”
