Small business confidence is rising, but half are in bad shape: CFIB
39% of manufacturers describe the general state of their business health as bad.
TORONTO — Small business confidence is slowly rising. The Canadian Federation of Independent Business (CFIB) Business Barometer gained 6.8 index points to 53.2 at the beginning of May, although half of owners say their companies are in bad shape.
An index level nearer to 65 indicates that the economy is growing at its potential.
Manufacturers were just under the national reading with a 53.1 on the index, a gain of 8.9 over April’s last reading. Business is looking up for 18% but 39% describe the general state of their business health as bad.
Average capacity utilization was 49.8%, up 5%, while 12% are looking at hiring over the next three months compared to 32% that will be reducing staff.
“Small business owners are settling into the new normal and finding ways to cope and adapt,” said Ted Mallett, CFIB’s vice-president and chief economist. “The prospect of restrictions loosening in some parts of the country is also bringing some hope, but many are still considering layoffs and holding off on investments. Insufficient domestic demand remains the biggest factor limiting sales amid the pandemic.”
Half of business owners said their business is in bad shape, while 14% estimated it’s in good shape. Fifteen per cent of owners said they will hire full-time staff in the next three months, but 39% are cutting back.
Quebec continued to post the lowest level of optimism at 36.4, followed by Saskatchewan (44.8), PEI (47.6) and Newfoundland and Labrador (50). New Brunswick was the most upbeat province at 59.5, followed by Manitoba (57.3), Ontario (57.2) and British Columbia (56.7). Alberta (55.3) and Nova Scotia (52.7) saw results near the national average.
Natural resources sector fell to the lowest confidence level at 18.2, followed by agriculture (27.3), with large declines in both sectors. Other industries posted results in the 40s and 50s, with most seeing improvements. Businesses in construction (57.5) were the most upbeat, followed by health services (56.3) and personal services (56.0).
Early May findings are based on 1,201 responses to a controlled-access web survey. Data reflect responses received on May 5 and 6. Findings are statistically accurate to +/- 2.8% 19 times in 20.
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The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 110,000 members across every industry and region.