Small business confidence remained steady but muted in September, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer released on Thursday.
The 12-month outlook dipped one point to 52.5, while the short-term optimism sits at 49.5 index points, said the national organization.
“There’s been a slight ease on small businesses but many challenges, including inflation and labour shortages, are still holding many firms back,” said Andreea Bourgeois, Director of Economics at CFIB. “Their sentiment held steady in September but with no improvement.
“There’s not a lot of optimism among small firms who are feeling uncertain about the next three months. Heading into the fall season, governments must focus on small business priorities to help ease their financial burden.”
The Barometer’s key highlights:
- Overall, 38 per cent of businesses say they’re in a good shape, while 18 per cent say they’re in a bad shape;
- Full-time hiring plans are muted, with only 18 per cent of businesses looking to hire in the next three months and 19 per cent planning to lay off;
- Skilled labour and input shortages continue to limit business growth for 51 per cent and 27 per cent of small businesses, respectively. Fuel and energy costs (67 per cent), wage costs (60 per cent) and insurance costs (54 per cent) were the top cost constraints for small businesses in September.
Rishi Sondhi, Economist with TD Economics, said both near and longer-term small business confidence declined in September, with both indices remaining well below their respective long-run averages. Meanwhile, other activity indicators, such as capacity utilization and hiring plans, also softened. As such, today’s report is firmly in line with our view for a significant slowdown in second half economic growth.
“Another key takeaway from the report is that the backdrop for small and medium sized businesses may be becoming less inflationary, as growth weakens. For instance, cost pressures related to energy cooled markedly, while planned wage increases remained below their peak. In addition, small businesses expect to see less inflation in the prices they charge to their customers. What’s more, labour shortages are slowly becoming less intense (although still highly problematic), suggesting that job markets may be loosening somewhat,” added Sondhi.
(Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
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