The 12-month small business confidence index has jumped 8.8 points reaching 56.4 in May, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer.
After the abysmal levels seen earlier this year, confidence is back to more seasonal levels and on par with the reading recorded one year ago in May 2023 (56.1), said the national organization.
Canada’s long-term confidence is driven mostly by Ontario’s significant gain in optimism, (+9.1 points to 58.1). The most notable changes are in the retail and transportation sectors; both have registered sizeable improvements of 4.9 and 4.7 points, it said.
Andreea Bourgeois
“Small businesses are overall feeling cautiously positive heading into the summer. Now that all the governments have tabled their budgets, business owners at least have some idea as to what to expect in the coming months. Their increased optimism could also be partly explained by much-anticipated interest rate cuts in June and the cooling labour market,” said Andreea Bourgeois, CFIB’s director of economics. “While some indicators of cost pressure and limitations on growth are still way above their historical averages, it’s still reassuring to see overall improvements in the small business sentiment.
“While historically more businesses plan to hire ahead of the busy summer season, this year those hiring plans are more cautious but at least firms are not looking to lay off either.”
The CFIB said this month’s Business Barometer suggests that the labour market pressures are easing, with 45% of businesses reporting a shortage of skilled labour, down from 47% last month. Full-time and part-time hiring plans remain timid in May, but stronger than earlier in the year.
“On the other hand, more businesses (68%) reported struggling with high tax and regulatory costs. The share of businesses indicating high insurance costs has come slightly down to 68% after peaking at 72% in April, but it still remains much higher than its historical average of 49%,” said the report.
“The average price and wage plan increases stabilized in May, with both indicators sitting at 2.8%. The average price increase indicator shaved off the 0.5 points gained in April and is almost on par with the March level (2.7%).”
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list. He was also named by RETHINK to its global list of Top Retail Experts 2024.
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