Business Barometer®: Small businesses’ price plans continue their downward trend in January, while confidence ticks up
Toronto, January 25, 2024 – Small businesses expect to increase prices by an average of 2.8% over the next 12 months, according to the latest Canadian Federation of Independent Business (CFIB) Business Barometer®. That compares to average plans of 3.0% in December. For the first time since March 2021, this indicator has dropped below 3%, the upper band of the Bank of Canada’s range for inflation of 1% to 3%.
The 12-month confidence index saw a small uptick to 49.0 in January but remained historically low. On the positive side, the share of businesses reporting labour shortage challenges is on a downward trend, and supply chain indicators have to a large extent normalized. However, the share of small businesses (48%) reporting challenges with borrowing costs is still elevated and double its historical average in January. About 48% of firms also report insufficient demand, which in this latter case is a three and half year high.
CFIB released its latest economic forecasts earlier this week and they show the Canadian economy is expected to display sluggish growth in Q1 2024, after having been more or less stuck in neutral in Q4 2023.
“After everything small businesses have gone through in the past year, they are hopeful for much-needed relief. The early signs of improved expectations they have been displaying recently could be a response to the cooling labour market, softening inflationary pressures and widely expected interest rate cuts in 2024,” concluded Simon Gaudreault, CFIB’s chief economist and vice-president of research.
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Dariya Baiguzhiyeva, CFIB
January Business Barometer®: January findings are based on 670 responses from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received from January 9 to the 16. Findings are statistically accurate to +/- 3.8%, 19 times in 20. Every new month, the entire series of indicators is recalculated for the previous month to include all survey responses received in that previous month. Measured on a scale between 0 and 100, an index above 50 means owners expecting their business’s performance to be stronger over the next three or 12 months outnumber those expecting weaker performance. An index level near 65 normally indicates that the economy is growing at its potential.
The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members across every industry and region, with over 10,000 members in Atlantic Canada. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at cfib.ca.