The confidence of Canadian small businesses has reached its lowest point since the onset of the COVID-19 pandemic in April 2020, according to the latest Business Barometer released by the Canadian Federation of Independent Business (CFIB). The 12-month small business confidence index dropped by 1.5 points to 47.2 in October 2023, marking the third-lowest reading in nearly 15 years.
The index is measured on a scale from 0 to 100, where an index score above 50 indicates that business owners expect stronger performance in the coming months, while a score near 65 suggests that the economy is growing at its potential.
Key findings from the report include:
1. Almost all Canadian provinces experienced declines in confidence, with Quebec and Ontario reporting the lowest long-term outlooks.
2. Small businesses are facing a range of challenges, including inflation, financial pressures, labor shortages, and overall economic uncertainty.
3. Businesses are concerned about occupancy (29%), borrowing (44%), insurance (56%), and wage costs (66%).
4. Skilled labor shortages remain a significant issue, with almost half of businesses reporting difficulties in finding qualified employees.
5. Some positive aspects were noted, such as improved price increases and wage plans in 2023. The Bank of Canada’s decision not to increase interest rates further provided some relief to entrepreneurs.
6. Rising concerns about insufficient domestic demand were highlighted, which is particularly worrying for the retail sector, with low levels of optimism despite the approaching holiday shopping season.
7. The impending Canada Emergency Business Account (CEBA) repayment deadline is causing anxiety among small businesses.
The report suggests that despite some positive developments, small businesses in Canada are still facing significant challenges that are impacting their confidence and long-term outlook. These challenges include economic uncertainty, labor shortages, high costs, and concerns about demand. The situation is expected to evolve in the coming months, influenced by various economic and geopolitical factors.