Small business confidence dips in May: CFIB
Manufacturing among the weakest sectors.
TORONTO — Small business confidence dipped slightly in May for the third consecutive monthly decline since February, according to the latest reading from the Canadian Federation of Independent Business.
The index slipped a third of a point to 62.1 from April’s 62.4. An index above 50 out of 100 means owners expecting a stronger showing in the next year outnumber those expecting a weaker performance.
CFIB chief economist Ted Mallett says manufacturing (a reading of 55.6), transportation and hospitality are the weakest sectors this month while information and financial services sectors are above the norm.
“The index is now at its lowest point since the summer of 2012, when the economy went through a slow-motion act,” said Mallett. “Canadian small business optimism remains cool this spring.”
Small business owners in Alberta are the most optimistic, with an index of 68.8, followed by Newfoundland and Labrador at 68.3, Saskatchewan at 65.8 and BC at 64.9.
Ontario (61.9), and Manitoba (61) are slightly below the national average, while New Brunswick (58.1) and PEI (55.6) are further back.
The Quebec reading fell five points to 58.9 and Nova Scotia is last with an index of 50.
Insufficient domestic demand was listed as the top limit on sales or production by 40% of the respondents followed by skills shortage (33%). Major cost restraints were taxes and regulations for 65% followed by fuel and energy (59%) and wages (48%).
Noting this is the third straight monthly decline for small and medium-sized business owners, Sonya Gulati, a senior economist with TD Economics, says in a bulletin that the index is now at its lowest point in almost year. “The reading reaffirms that the Canadian economy is growing below its potential level.”
Since most analysts expect the Canadian economy to have expanded by 2% to 2.5% (annualized), she says confidence readings among small and medium-sized business owners (99% of all employer businesses) and other economic indicators foreshadow a modest deceleration for the second quarter.
The May findings are based on 1,054 responses, collected from a random sample of CFIB members.
Files from Canadian Press