Toronto, August 31, 2017 – Small business optimism in Canada has dropped for the third month in a row, according to the latest Business Barometer survey, released today by the Canadian Federation of Independent Business (CFIB).
The monthly index—based on a national survey which asks business owners how they expect their business to perform moving forward—fell to 59.8 in August, the lowest mark since November, 2016.
“The drop in the index is really a tale of two economies,” said Ted Mallett, Chief Economist at CFIB. “Business optimism continues to be robust in most of eastern Canada, while optimism in the largest economies west of Quebec is sagging.”
For example, both Ontario (56.9) and British Columbia (63.3) dropped 2.6 points from their index levels last month, while Alberta (57.8) showed little change. Not surprisingly, business owners in these three provinces expect their wage costs to rise, likely due to provincial labour legislation plans.
Meanwhile, business optimism remains buoyant in the east, with owners in PEI and Quebec showing the highest index levels at 72.7 and 71.5 respectively. Business owners in New Brunswick (67.6) and Nova Scotia (66.7) are also reasonably upbeat, along with Manitoba (65.2).
Saskatchewan (52.9) and Newfoundland & Labrador (54.5) remain the most pessimistic, but movements in the August results are in a positive direction.
“The general state of business health is ‘good’ for 42 per cent of respondents, nationally—still a reasonably positive result,” adds Mallett. “There are however some red flags arising from this and recent surveys—particularly, hiring and capital investment plans are showing signs of weakness.”
The survey report also breaks down responses into industry groupings: Strongest industry index results are in wholesale (64.8), health services (64.2); and professional services (63.8); weakest sentiment is in the agriculture (48.9), natural resources (50.0) and retail sectors (56.6).
August 2017 findings are based on 706 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received through August 21. Findings are statistically accurate to +/- 3.7 per cent 19 times in 20.
Note: 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.
Read the August Business Barometer.
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CFIB is Canada’s largest association of small and medium-sized businesses with 109,000 members across every sector and region.