Ted Mallett, Vice-President & Chief Economist
Canada’s small business owners were a little less confident in July according to CFIB’s latest Business Barometer®. The index of optimism fell back to 57.6 this month, from 60.0—the 13-month high recorded in June. The recovery from cyclical lows in small business confidence reached in early 2016, therefore, remains choppy.
Index declines were seen this month in 6 of 10 provinces, including; British Columbia (66.4), New Brunswick (63.3), Ontario (61.2), Nova Scotia (58.5), Manitoba (56.4) and Saskatchewan (51.1). Notable improvements in Quebec (64.1), Newfoundland & Labrador (50.0), Alberta (46.7) and Prince Edward Island (68.8) helped temper the drop in the national average.
Sector results are closely grouped around the average, and business owners in manufacturing (59.9), wholesale (58.0) and retail (also 58.0) continue to have levels of optimism moving in line with economy-wide norms. There has been improvement the construction sector (58.8), however, and natural resources businesses are now the most optimistic (55.4) they have been since late 2014. The most upbeat businesses are found in the finance, insurance and real estate (65.8), health and education services (65.8) and information, arts and recreation (63.0) sectors.
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.
Other indicators from the survey displayed little change this month. Short-term employment plans are weak, but still net positive with 18 per cent of businesses expecting to add full-time staff in the next few months, versus 12 percent who expect to cut back. Overall, 39 per cent of owners report their businesses to be in good shape—about the long term norm—while an elevated 14 per cent say they are in poor shape.