CFIB reports demand struggles and cost pressures continue to challenge Canadian small businesses in September
The Canadian Federation of Independent Business (CFIB) September 2024 Monthly Business Barometer reveals that labour shortages are limiting the growth of small businesses.
Four out of ten small firms report skilled labour shortages, while 16 percent cite shortages of unskilled or semi-skilled workers. This marks a two-year low in labour shortage figures.
Additionally, only 12 percent of businesses plan to hire in the short term, highlighting the ongoing decline in the labour market this month.
This data comes from the small and medium-sized enterprise (SME) sector, which makes up more than 99 percent of employers and 38 percent of the private-sector workforce.
Wages and prices are expected to rise by an average of 2.3 percent, also at a two-year low.
According to Simon Gaudreault, chief economist, and vice-president of Research at CFIB, “Labour market indicators clearly show employers are on the brakes. At the same time, price and wage plans are on par and overall are trending downwards, which is good news.”
Meanwhile, 53 percent of businesses report that insufficient demand is hindering their growth, a figure that is nine points higher than the historical average.
Firms are also grappling with multiple cost constraints. Insurance, taxes, and wages are cited as top concerns by 68 percent, 67 percent, and 67 percent of businesses, respectively. These figures have remained above their historical averages for over a year.
Andreea Bourgeois, CFIB’s director of Economics, explained that businesses are coping with reduced demand, lower revenues, and rising costs.
“As businesses are dealing with reduced demand, lower revenues, and higher costs, they’re less likely to hire. Instead, they’re hanging on to their existing employees.”
Bourgeois added that many SME employers are waiting for clearer signs of economic improvement before making any major decisions related to growth.
The small business confidence index decreased by two points, falling to 55.0 in September. It has now been below its historical average of 60 for 27 consecutive months.
Gaudreault commented that the drop in optimism among small businesses is “a disappointing result” that extends the period of low confidence among Canadian entrepreneurs.
He pointed out that businesses continue to face high costs, and despite the likelihood of interest rate cuts by the Bank of Canada, the pressure on small businesses is expected to persist.
Gaudreault’s analysis supports the need for further interest rate reductions, suggesting that the cuts could accelerate to provide relief to small businesses.
