Small business optimism edged up in January, but not nearly enough to counter the steep dive it had taken the month before. CFIB’s Business Barometer® Index rose two-and-a-half points to 56.1 to open 2019, but it remains about five points below readings taken in the fall of 2018—which themselves were weak by historical norms. Healthy index levels should be 65 or above.

Business owners in Quebec and PEI remain the most confident in the country, with index levels both at 63.5. The gap is now quite narrow compared to Nova Scotia (up 6 points to 63.1), New Brunswick (down about a point to 61.3) and Ontario (up slightly to 60.4). Weakness, however, remains in the West with sentiment in Alberta plunging almost 8 points in January to only 37.5. Optimism was also down this month in British Columbia (57.3) and Manitoba (56.3), while remaining weak in Saskatchewan (55.2) and Newfoundland & Labrador (47.9).

The industry picture showed improving sentiment in six sector groups and downshifts in seven. Personal and professional services business owners are most upbeat, while those in natural resources and hospitality are least optimistic. Hiring plans were in rough balance this month, but both wage and price plans have settled since peaking earlier in 2018. Notably, the state of unfilled orders and accounts receivables continue to weaken–falling to 2016 levels.

Additional insights into business sentiment by city and provincial region are revealing when measured over a full year. Overall 2018 results show that optimism in Quebec and Prince Edward Island not only led the country, but it was evenly distributed among its key cities and regions. In other provinces, optimism generally tended to be higher in major urban centres compared to sentiment in other areas. See back page of the Canada report for 2017 and 2018 results.

Business Barometer is prepared by CFIB.