The long-term small business confidence has lost ground for the second month in a row, finds the January 2025 Monthly Business Barometer by the Canadian Federation of Independent Business (CFIB).
This indicator sat at 54.6 index points in January after a loss of two points, bringing the total drop to five points since November, said the report.
Confidence among exporting small businesses fell significantly since this November (-8.1 points). Optimism among importing SMEs also dropped several points (-3.3 points), said the CFIB.
Measured on a scale between 0 and 100, an index above 50 means owners expecting their business’s performance to be stronger over the next three or 12 months outnumber those expecting weaker performance.
“The threat of upcoming U.S. tariffs and political changes in Canada have installed a lot of fog in front of the windshield. Our economy is already paying the price of this lack of direction. The uncertainty is making it harder for businesses to plan ahead and make critical decisions, such as hiring or investment,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research.
“The various barriers to domestic trade, ill-timed tax increases and our epic red tape have been strangling Canada’s entrepreneurs for far too long, so it’s not surprising that Canada has entered this critical period in such a weak position. With U.S. tariffs that could be coming our way this weekend, in the short term we need to rapidly send business owners a signal they will be supported, while ensuring in the longer term they are in a better position to diversify their markets, innovate and grow. A good place for governments to start would be to reduce red tape, to roll back taxes including on capital gains and carbon, and to remove well-known internal trade barriers.”
The CFIB is Canada’s largest association of small and medium-sized businesses with 100,000 members across every industry and region.
“The jury is still out on the final impact of the GST/HST tax holiday on involved firms. We will see in the next few weeks how they experience the last stretch of the tax holiday. This includes of course a repeat of the administrative challenges and costs they had to face during the implementation rush, but this time merely to go back to business as usual,” said Andreea Bourgeois, Director of Economics at CFIB.
Businesses in retail (+6.9 points since December), health and education (+5.3) and hospitality (+1.5) were among the few registering an increase in long-term confidence in January. Most sectors remained below their historical optimism levels, said the CFIB report.
Across all sectors, nearly record high shares of businesses reported struggling with low demand (52%) and taxes/regulations (70%), it added.
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