Small business confidence saw virtually no change in June, with the index remaining below the 50-point mark for a second month in a row, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer.
Measured on a scale between 0 and 100, an index below 50 means owners expecting their business’s performance to be weaker over the next three or 12 months outnumber those expecting stronger performance.
“Although early signs from abroad suggest the worst of the fuel shock may be behind us, many consumers and businesses remain under strain, and the outlook is still uncertain. We see this month marks a low point for confidence heading into the summer but we hope it will rebound in the upcoming months, though important challenges remain,” said Simon Gaudreault, CFIB chief economist and vice-president of research.
Price plans have held near the 3% mark for three consecutive months, at the upper end of the Bank of Canada’s inflation target range, said the CFIB.
Fuel costs remain the top cost constraint for 66% of small businesses, while weak demand continues to weigh on more than half (53%) of small firms. Meanwhile, the share of businesses reporting challenges with capital equipment and technology costs has steadily climbed over the past two and half years, reaching 38% of small firms, added Canada’s largest association of small and medium-sized businesses with 103,000 members across every industry and region.
“Businesses are being squeezed from all sides, including by rising input and occupancy costs, with the shares of affected firms on track to nearly double historical norms. At the same time, their capacity to absorb higher costs is limited, and recent years have taken a toll on overall business health, reflected in a net share of just 18% of firms now reporting they are in a good general situation,” said Laure-Anna Bomal, CFIB senior economist.
Despite summer being the busiest season for tourism and other sectors, hiring plans remained muted, with 12% of small firms planning to hire full-time staff and 11% planning to hire part-time employees over the next three months.
“The economy is resilient, but cracks are starting to show. The longer conditions remain weak, the greater the risk for many businesses,” said Gaudreault. “One of the most impactful things Canadians can do this summer is shop local and promote local businesses, and CFIB’s upcoming Big Thank You Contest is a great way to get involved.”
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