Ted Mallett, Vice-President & Chief Economist
Canadian small business sentiment turned definitively upward in April. CFIB's Business Barometer® Index climbed nearly seven points in the month, rising to 59.2—its highest reading since June of last year.
One month of data can often show spikes, but the size of the increase suggests the long-awaited normalization of sentiment has begun. With the exception of the natural resources sector, agriculture and transportation, indexes across other industry groupings are pretty tightly grouped—which suggests general stability. Sentiment also rose in 6 of the 10 provinces—and notably in Alberta, where a two-point improvement in its index to 28.6 is hopefully a sign of that economy lifting itself off the floor.
Index scores show Prince Edward Island businesses are the most optimistic (70.8), followed by those in British Columbia (65.4) and Nova Scotia (64.6). A big jump in Ontario’s index to 62.6 also helped drive the improvement nationally. Index levels in Quebec (62.2) and New Brunswick (57.5) straddle the national average by only a few points, while conditions remain comparatively weaker in Newfoundland & Labrador (46.4), Manitoba (54.0) and Saskatchewan (48.8).
On a scale between 0 and 100, an index above 50 means owners expecting their business’ performance to be stronger in the next year outnumber those expecting weaker performance. One normally sees an index level of between 65 and 70 when the economy is growing at its potential.
A look at order books and accounts receivables still show the fragility of business conditions, and as a result hiring intentions are not as quite robust as we normally see this time of year. The improvement in the value of our currency, however, has dramatically tempered pricing plans because of the effects on the cost of imported products.