Small Business Confidence Up but Still on Shaky Ground

Long-term small business confidence gained 9.3 index points in April, reaching 34.8, up from the record low level of 25 points recorded in March.

This is according to the latest business barometer survey from the Canadian Federation of Independent Business (CFIB).

“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,” says Andreea Bourgeois, CFIB’s director of economics. “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. We’ve only gone from an extremely pessimistic outlook to just pessimistic.”

Business owners are forecasting price increases of an average of 3.5 per cent and plan to raise wages by an average of 2.2 per cent over the next few months.

Weak demand continues to plague more than half (55 per cent) of small firms. While hiring intentions slightly improved in April, they are still below their historical averages for this time of year, with 14 per cent of businesses looking to hire and 17 per cent planning to lay off in the next few months.

All provinces maintained their very low optimism levels. Businesses in retail, hospitality and construction saw a slight recovery in confidence, while those in agriculture and wholesale registered another decline in optimism.

“The cost of doing business is still expensive,” says Bourgeois. “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.”