The following report is produced by Ted Mallett, CFIB Vice-President & Chief Economist.
In a big turnaround from a downbeat June, Canada's small and mid-size business owners are considerably more optimistic in July. CFIB's Business Barometer® Index rose almost 5 points this month, making up almost all the ground lost in the previous four months. The current 64.2 index reading is the best since February's 66.2 level.
On a scale between 0 and 100, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. One normally sees an index level of between 65 and 70 when the economy is growing at its potential.
While Ontario was the centre of the weaker sentiment in June, was also the source of the big improvement in July. At 66.5, Ontario's index is now above the national average by more than two points and on par with Alberta and Newfoundland and Labrador. Improvements are also seen this month in Saskatchewan - again the most upbeat place of business - and Nova Scotia. Conversely, we note lower optimism levels in Prince Edward Island, which has seen its index dip below 50. July business optimism in all other provinces remains relatively steady compared to June.
We see steady or improving business sentiment in most sectors, particularly construction and manufacturing. Retail is the only sector notably on the downside. Looking at other surveyed indicators, July movement in pricing plans, hiring plans, new orders, capital spending, customer demand and labour availability all suggest an improvement in business performance - good news for the Canadian economy as a whole.
The full report is available at: http://www.cfib-fcei.ca/cfib-documents/rr3298.pdf.