Small business confidence remained stable but low in August, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer®. The short-term optimism index gained three points, climbing to 50.0, while the 12-month outlook reached 53.5, a small increase of 0.8 points since July.
“Small business owners continue to feel the pressures of higher costs and labour shortages, and they’re taking a wait-and-see approach,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. “They are cautious about the future and that impacts confidence, hiring plans, and business growth plans.”
The share of businesses reporting being in good shape increased to 37% in August, compared to 32% in July. Hiring plans haven’t changed much, with 20% of firms planning to hire full-time staff and 15% looking to lay off.
Among provinces, Prince Edward Island continues to be the most optimistic over the short- and long-term. On the other hand, Newfoundland and Labrador posted the lowest levels of confidence over both time spans.
Average price increase plans are trending down from May’s high of 4.9%, currently sitting at 4.2%. Average wage plans have also decreased to 3.1%, after having peaked at 3.6% in June.
Skilled and semi- or unskilled labour shortages continue to be the top factors limiting business growth (52% and 37% of businesses are experiencing them, respectively). Fuel and energy costs have remained the top cost constraint for 72% of small firms.
Businesses in the natural resource sector saw the highest jump in short-term optimism, up by 11 index points. However, one month does not make a trend and the small number of survey respondents from that sector in August advises caution before drawing any firm conclusions. The hospitality sector dropped 7 index points over the short-term, likely due in part to seasonality, and is sitting just above the Canadian average.
“The indicators of business health show that a lot of business owners are still uncertain and hesitant about the future. As we head into the fall season, governments need to keep in mind that many businesses are still struggling,” said Andreea Bourgeois, Director of Economics at CFIB.
August Business Barometer®: August findings are based on 682 responses from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received from August 2 to the 18. Findings are statistically accurate to +/- 3.8 per cent, 19 times in 20. Every new month, the entire series of indicators is recalculated for the previous month to include all survey responses received in that previous month.