Small business confidence rose 2.5 points to 56.1 in the Canadian Federation of Independent Business (CFIB)’s Business Barometer® this month, but remained below fall 2018 levels.
“We’re seeing an uptick in confidence levels, but they are still well below what you would expect to see in a healthy, growing economy,” said Ted Mallett, CFIB’s vice president and chief economist. “The continued slump in business confidence is reflected in lower wage and price expectations. Businesses’ unfilled orders and accounts receivable are also taking a hit, falling to 2016 conditions.”
Staffing intentions are mixed, with 18 per cent of businesses planning to add full-time employees in the next three months, and 15 per cent planning to cut back on numbers. Overall, 41 per cent of owners say their business is in good shape, while 14 per cent say it is in bad shape.
An index level between 65 and 70 normally indicates that the economy is growing at its potential.
Provincial results: Major confidence loss in Alberta
Alberta fell to the lowest confidence level in the country at 37.5 after losing 7.6 index points. Newfoundland & Labrador had the second-weakest confidence level at 47.9. Prince Edward Island and Quebec remained the most optimistic provinces at 63.5, with Nova Scotia coming in close at 63.1 after a major increase of 6.1 points. New Brunswick (61.3) and Ontario (60.4) posted confidence levels above the national average, while British Columbia (57.3), Manitoba (56.3) and Saskatchewan (55.2) were more closely aligned with the average.
Additional breakout results for Canada’s major municipalities for 2018 reveal that optimism tended to be higher in major urban centres in most provinces. Quebec and Prince Edward Island led the country in confidence throughout 2018 and confidence in major cities and regions in those provinces was evenly distributed.
Industry results: Confidence in natural resource sector falls
Natural resources lost 6.5 index points and became the least confident sector at 45.5 this month, followed by agriculture (50.5) and hospitality (51.7). Personal services was the most optimistic sector at 63.4, followed by professional services, which experienced the greatest confidence gain, rising 5.2 points to 61.6. After several low months, the retail sector experienced a healthy increase of 5.1 index points, but its level remains subpar at 56.6.
Read the January Business Barometer®