Canada's small business optimism dropped by more than five points in June to the 60.9 mark, according to the Canadian Federation of Independent Business (CFIB)’s Business Barometer®.

“June’s big shift is almost entirely localized to a 10-point drop in Ontario,” said Ted Mallett, CFIB Chief Economist. “Index levels often vary for purely statistical reasons, but the downdraft in Ontario is likely policy based. The sweeping labour standards legislation announced in late May appears to be adding considerable uncertainty over future operating conditions there.”

Ontario’s index now sits at 58.0, third lowest in the country after Saskatchewan (51.8) and Newfoundland and Labrador (48.2), both of which saw slight improvements in June. Businesses in British Columbia (69.5) are still the most optimistic in the country, with Prince Edward Island (67.5) and Manitoba (67.1) close behind. Quebec (65.8) saw a small gain, as did New Brunswick (63.6), while Nova Scotia (63.5) saw a slight dip. After six consecutive months of gains, Alberta (61.7) held even in June.

Industry results were also likely impacted by Ontario policy influences, with indexes rising in four and falling in nine categories. The most optimistic sectors remain health care (70.3), financial (69.8) and professional services (67.3). The least optimistic businesses are in natural resources (54.3), retail (55.5) and agriculture (56.7).

“Unsurprisingly, most other business health indicators also slipped this month” added Mallett. “Short-term hiring normally starts to ease off at this time of year, but a bigger pullback in Ontario took the national numbers down further. Wage growth expectations are also sharply up because of Ontario.”

The report is available on the CFIB website.