Small manufacturers’ confidence edges up in February: CFIB
Following national trend but below the Canadian average, skills shortage still top constraint.
TORONTO — Small business confidence saw partial recovery in February, rising 5.2 index points to 60.5 on the Canadian Federation of Independent Business (CFIB)’s latest Business Barometer. Manufacturers moved the needle by 1.8 to achieve a reading of 57.8.
“It looks like there is some cautious optimism in the small business sector early in the month,” said Ted Mallett, CFIB’s vice-president and chief economist in a statement. “Most provinces and sectors improved their outlook over January views.”
He said other indicators of business health, such as hiring intentions and accounts receivable, are steady but weaker than normal. The survey period covered the early part of February, which will not fully reflect emerging business concerns over the coronavirus and transportation network blockages.
Eighteen per cent of manufacturers indicated they planned to hire full-time employees over the next three months, 16% will staff down; and 45% indicated general business health was good versus 13% who said it was bad.
Top cost constraints are taxes (60%), wages (51%) and fuel/energy (48%). Greatest limitations to sales or production are a shortage of skilled workers (43%), insufficient domestic demand (32%) and a shortage of semi- or unskilled labour (30%).
Among other industry sectors, transportation lost 2.0 index points to 48.6, the lowest sectoral optimism level, while financial services fell 1.4 points to 59.6. Agriculture (51.5) and hospitality (52.6) also posted optimism levels well below the national average.
The natural resource sector (57.6) and the retail sector (61.0) posted the biggest confidence gains – 8.9 and 8.6 index points respectively – though confidence in natural resources remained below the national average. Health services (65.3) and professional services (63.7) were the most optimistic sectors.
Forty-one per cent of business owners say their firm is in good shape, while 14% say it is in a bad state, a slight improvement over last month. Hiring intentions also improved but remained weak for the time of year, with 15% planning to hire full-time staff in the next three months, and 13% planning to cut back.
An index level nearer to 65 indicates that the economy is growing at its potential.