The long-term optimism index has been on the rise for seven months in a row and is at the highest level in almost a year, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer® released on Thursday.
The CFIB said the 12-month index sat at 56.4 in May.
“Small business optimism for the long term has been slowly, but steadily increasing since last November. While the index is still relatively modest and below its historical average of 61, it’s reassuring to see some gains in optimism levels,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB. “However, bigger than usual challenges such as markedly lower sales for half of businesses, the record high cost of doing business, or a historically difficult labour market remain, making it difficult for Main Street to recover.”
The national organization said P.E.I (75.0) and Newfoundland and Labrador (68.0) had the most upbeat entrepreneurs due to the beginning of the summer tourism season, while Quebec (48.8) and Saskatchewan (51.9) were at the bottom of the optimism scale this month. Health and Education services (67.6) topped the sector rankings, while Agriculture (45.6) and Finance, Insurance, Real Estate and Leasing (45.7) were virtually tied for last place, it added.
“While some headwinds have eased, labour shortages and their side effects are still one of the biggest headaches for small businesses. The top limitation on business growth in May continued to be labour shortages (48 per cent for shortages of skilled workers and 32 per cent for semi- or unskilled workers). For example, one CFIB member commented that labour shortages at their business resulted in reduced menu offerings. Another reported a productivity hit after having to train technicians in-house due to a lack of qualified domestic or foreign workers, while a third one mentioned having to automate and swap domestic manufacturing with imported goods in order to cope with higher wages,” said the CFIB, adding that full-time staffing plans have been on a downward trend since March, with 22 per cent of businesses looking to hire in the next three months.
“Usually, businesses are looking to hire more people ahead of the busy summer season. The moderate indicator this month suggests employers are struggling to find qualified staff, or are looking for alternatives, in a cooling labour market,” said Andreea Bourgeois, Director of Economics at CFIB. “The good news though is that fewer employers (12 per cent) were planning to lay off in the next three months.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region.
(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 worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario 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)
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