Small businesses suffered a significant drop in confidence this month, falling 3 index points to 55.9 on the Canadian Federation of Independent Business (CFIB)’s Business Barometer®.
“This is one of the worst readings we’ve seen in the past three years,” said Ted Mallett, CFIB’s vice-president and chief economist. “It’s not typical for hiring intentions to be so low at this time of year, as businesses should be gearing up for the busier spring and summer seasons, but it’s indicative of the low level of optimism that private-sector firms are reporting.”
The relatively weak level of optimism is in line with a number of other trends developing in many parts of the economy, namely slowing consumer demand, rising inventories, new trade pressures and a widely expected slowdown in the US.
Overall, 43 per cent of owners say their business is in good shape, while 14 per cent say it is in bad shape. Only 17 per cent of business owners are planning to hire full-time staff, while 15 per cent plan to cut back. Plans to increase wages and prices also dropped this month, to 1.7 and 1.5 per cent respectively over the next 12 months.
An index level nearer to 65 normally indicates that the economy is growing at its potential.
Provincial results: Major drop in confidence in Ontario and Saskatchewan
Nova Scotia and Quebec posted the highest levels of optimism this month, at 66.8 and 65.3 respectively. Ontario experienced the greatest drop in optimism this month, falling 4.6 index points to 59.5, followed by Saskatchewan, which lost 4.4 index points to 50.8 and fell well below the national average. Prince Edward Island (59.7), New Brunswick (56.6) and British Columbia (55.9) posted results equal to or above the national average. Alberta remained the least optimistic province at 42.1. Newfoundland & Labrador (48.7) and Manitoba (51.4) also posted results below the national average
Industry results: Wholesale jumps to most optimistic sector
Businesses in natural resources experienced a sharp drop in confidence, falling 5.8 index points to only 38.8, the lowest of any sector. Businesses in the agriculture sector also posted low optimism levels (49.0), which is expected for this time of year. Wholesale gained 4.2 points to 61.0, rising to the highest industry confidence level. Professional services (60.6), financial services (60.2), health services (60.2) and information (60.0) followed closely.