CFIB May Business Barometer: Small business confidence goes up, price plans go down 

Long-term small business confidence is slowly regaining lost ground after crashing to historic lows in March. The 12-month indicator added 5.3 index points, reaching 40.0 in May, according to the latest Canadian Federation of Independent Business (CFIB)’s Monthly Business Barometer survey released on Thursday.

“Now that the federal election is over, there may be clearer guidance and renewed leadership on tariffs and other federal matters, and this and a somewhat de-escalating trade war may explain in part why small business sentiment is trending in the right direction again. However, these are just timid beginnings of a rebound. The indicator is still well below its historical average,” said Simon Gaudreault, chief economist and vice-president of research at CFIB.

“The optimism glass is not even half-full, it’s still fairly empty.”

The CFIB is Canada’s largest association of small and medium-sized businesses with 100,000 members across every industry and region.

Inflation pressure indicators have eased, with small businesses planning to raise prices by an average of 2.9%, down from 3.5% in April. Wage plans remained unchanged at 2.1%, said the CFIB.

All provinces have their confidence levels below 50. Weak demand remains the top barrier to growth for 59% of businesses, while over two-thirds (68%) of firms are constrained by tax and regulatory costs. Hiring intentions are far below seasonal levels, with 14% of businesses looking to hire full-time in the next few months and 16% planning to lay off.

“Many small businesses are breathing a sigh of relief as it seems we’ve avoided the worst of tariffs. But there’s still lots of uncertainty around, putting long-term investments and business planning on hold,” said Andreea Bourgeois, CFIB’s director of economics.

As Parliament gets set to reconvene on May 26, nearly two-thirds (62%) of small business owners are not confident that Canada’s new federal government is committed to supporting small business, finds new data from the CFIB.

The organization said some of those key small business priorities that are urgently needed include:

• Tariffs: Ensuring that the money collected through Canadian counter tariffs is returned quickly to affected Canadian small businesses.
• Carbon tax: Passing legislation to formally eliminate the carbon tax and returning the remaining $600 million in 2024-25 carbon tax rebates to small businesses
• Tax-free rebates: Ensuring the small business carbon tax rebates are delivered tax free as promised. Other employer rebates, such as Workers’ Compensation Boards (WCB) rebates, must also be delivered tax free to boost the economy.
• Capital gains: Delivering on the promised increase to the Lifetime Capital Gains Exemption to $1.25 million and implementing the promised Canadian Entrepreneurs’ Incentive which would lower capital gains taxes on up to $2 million following a business sale.
• Small business tax rate: Lowering the federal small business tax rate from 9% to 0% for the foreseeable future.
• Internal trade: Working with provinces to capitalize on the current momentum towards the elimination of internal trade barriers by adopting mutual recognition.

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