Decoding Small Business Confidence in Canada
Steering a business through the ever-evolving economic landscape requires insight and foresight. The CFIB Business Barometer report is a valuable tool to help guide small business owners through the currents of optimism, challenges, and trends.
It gives us a clear view of how small business owners are feeling about their future prospects in Canada, measuring optimism in two ways: the long-term and short-term outlooks.
- The long-term optimism index, which looks ahead 12 months, increased slightly to 54.8
- The short-term index, which considers the next 3 months, dropped to 47.9 from the previous month.
These numbers show us how business owners are thinking about the future in both the near and distant terms.
Provincial Confidence
When we zoom in on different provinces, interesting patterns emerge. Most Western provinces have seen increased optimism over the long term.
- Saskatchewan’s optimism increased by a notable +3.7
- British Columbia experienced a small dip of -0.6
- Ontario’s optimism rose by +2.2
- Quebec remained relatively stable with a small decrease of -0.1
- In the Atlantic provinces, except for Nova Scotia, long-term optimism declined. Notably, Prince Edward Island, Nova Scotia, and Alberta had optimism levels that aligned with a more normal range this month.
Sectoral Confidence
Confidence levels differ significantly across sectors. While sectors like agriculture (42.0), retail (47.1), and transportation (51.3) show lower levels of confidence, sectors like information and recreation (67.0), health and education (63.9), and finance, insurance, real estate, and leasing (63.2) are leading the way with much higher confidence levels. This discrepancy could be attributed to the varying impacts of economic conditions on different industries.
Growth Factors
A notable finding is the rise in businesses pointing to insufficient domestic demand as a constraint on sales or production growth, hitting 40%. This crescendo from a low of 21% in June 2022 surpasses the historical average of 36%, signalling a need to address demand-related issues to stimulate growth.
Inflation and Wages
A journey into inflation reveals intriguing notes. Average price and wage increase plans for the coming 12 months decreased in August, resting at 3.0% and 2.5%, respectively. This is a significant drop from mid-2022’s zenith highs of 4.9% and 3.6%. These numbers align with a broader economic trend of price pressures easing after peaking in the middle of 2022 and are also moving closer to their historical averages of 2.1% and 1.8%.
Interestingly, the report reveals that the number of businesses planning to raise wages and prices by 6% or more has decreased by about two thirds compared to the middle of last year. Overall, these trends suggest a gradual return to pre-pandemic economic levels.
Overall Recovery and Pre-Pandemic Trends
The report showcases an evolving economic landscape as businesses gradually return to pre-pandemic levels. This can be seen in trends such as declining inflation expectations and shifting optimism indices. While there might still be challenges ahead, the data suggests a positive trajectory toward recovery.
Consider PFG Financial as your personal resource to help you navigate the business world. Contact us today! 905-686-8787
ADDITIONAL RESOURCES
Business Barometer® National Summary: https://www.cfib-fcei.ca/hubfs/research/mbb/Business-Barometer-Canada-2023-08.pdf
Business Barometer® Provincial Summaries: https://www.cfib-fcei.ca/hubfs/research/mbb/Business-Barometer-provinces-2023-08.pdf
Business Barometer® Industry Summaries: https://www.cfib-fcei.ca/hubfs/research/mbb/Business-Barometer-industries-2023-08.pdf
Business Barometer® Data Table: https://www.cfib-fcei.ca/hubfs/Business-barometer-data-donnes-2023-08.xlsx
