The share of firms reporting skilled labour shortages (40 per cent) is at its lowest since June 2021 and overall trending downwards since its peak at 55 per cent in May 2022, according to the September 2024 Canadian Federation of Independent Business (CFIB) Monthly Business Barometer.
The CFIB also reported that the share of firms reporting shortages of unskilled or semi-skilled labour (at 16 per cent) is also at its lowest since the beginning of 2021 and overall trending down albeit it had hovered close to its historical average of 20 per cent since March 2024.
The report said only 12 per cent of firms are planning to hire in the short term. This fresh data from the small and medium-sized (SME) sector (representing more than 99 per cent of employers and 38 per cent of the workforce in the private sector) indicates that the rapidly cooling labour market has continued to lose strength this month, added the CFIB.
Small firms plan to raise wages and prices by an average of 2.3 per cent in both cases, also a low point in over two years and the share of businesses indicating that insufficient demand is limiting their growth is at 53 per cent this month and a full 9 points over its historical average, according to the report.
“Labour market indicators clearly show employers are on the brakes. At the same time, price and wage plans are on par and overall are trending downwards, which is good news,” said Simon Gaudreault, Chief Economist and Vice-President of Research at CFIB.
“The small business optimism index has slightly dropped this month, a disappointing result that is further extending the stretch of subpar confidence displayed by Canadian entrepreneurs. There’s ample room for improvement in the coming months, with a monetary policy that is likely to remain overly restrictive for a while (no matter how fast the Bank of Canada cuts interest rates) and with high costs that continue to exert pressure on small businesses. Our data support a continuation, in fact likely an acceleration, of interest cuts by the Bank of Canada.”
The CFIB said the long-term small business confidence index shaved off two index points, reaching 55.0 in September and has now been below its historical average (60) for 27 months in a row.
It said shares of small businesses struggling with numerous cost constraints, such as insurance (68 per cent), taxes (67 per cent), and wages (67 per cent), remain elevated. These indicators have been above their historical averages for at least over a year.
“As businesses are dealing with reduced demand, lower revenues and higher costs, they’re less likely to hire. Instead, they’re hanging on to their existing employees. A lot of SME employers are currently looking for clearer signs of economic improvement before they can make growth-fueling decisions again,” said Andreea Bourgeois, Director of Economics at CFIB.
