Employers 'feeling cautiously positive heading into the summer,' says CFIB report
Small business confidence in Canada has seen a notable uptick this May, signaling a rebound from earlier setbacks, according to a report from the Canadian Federation of Independent Business (CFIB).
The 12-month small business confidence index surged by 8.8 points, reaching 56.4, a level reminiscent of May 2023 figures.
This resurgence in confidence is attributed to Ontario’s substantial rise in optimism, marking a 9.1-point increase to 58.1. The retail and transportation sectors notably contributed to this positive shift, each witnessing significant improvements of 4.9 and 4.7 points, respectively.
Andreea Bourgeois, CFIB’s director of economics, commented, “Small businesses are overall feeling cautiously positive heading into the summer. Now that all the governments have tabled their budgets, business owners at least have some idea as to what to expect in the coming months.”
He noted anticipation of potential interest rate cuts in June and a stabilizing labour market further buoyed business sentiment.
Improved business outlook despite challenges
Despite certain indicators of cost pressures persisting above historical averages, the report indicates a general improvement in small business sentiment. Price and wage plan increases stabilized in May, with both indicators resting at 2.8%. Although the average price increase indicator reverted to March levels, it remains robust.
The labour market appears to be experiencing a slight reprieve, with fewer businesses reporting a shortage of skilled labour compared to the previous month, said the CFIB. While full-time and part-time hiring plans remain cautious, they are notably stronger than earlier in the year, reflecting a tentative yet positive outlook.
However, challenges persist, with a significant portion of businesses grappling with high tax, regulatory, and insurance costs. Despite a slight decrease in the proportion of businesses citing high insurance costs compared to April, the figure remains well above historical averages.
The CFIB’s May Business Barometer was compiled from responses of 602 small business owners.
