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Business Barometer®: Small business confidence rebounds in August

Toronto, August 25, 2016 – After a slight dip in July, optimism among Canada’s small business owners bounced back in August with the national Business Barometer® index rising by more than two points to reach 59.8.

“There were notable gains in five provinces and dips in the five others,” said Ted Mallett, Canadian Federation of Independent Business (CFIB) chief economist. “The good news is that the declines in four of the five other provinces were very slight, about a point or less. The exception was Newfoundland & Labrador, which plunged by more than 10 points from July’s index. The overall picture remains one of guarded expectations, as this is the second-highest monthly index since May 2015, yet the index is still running five points shy of its 2010-2014 average.”

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.

Of those provinces gaining in optimism, PEI led the way at 70.5, followed by Quebec (64.9), Ontario (62.6), Nova Scotia (62.3) and Saskatchewan (54.9). Confidence levels dropped slightly in British Columbia (65.6), New Brunswick (63.0), Manitoba (56.1) and Alberta (45.6), while Newfoundland & Labrador plummeted to 37.8.

There was a similar counter-balancing act across sectors, with seven tracking upwards and six dipping downwards. The most optimistic businesses are those in professional services (70.0) and health and education services (64.0), followed closely by information, arts and recreation (63.5), finance, insurance and real estate (62.2), hospitality (61.3) and wholesale trade (61.2). The remaining sectors are showing weakness, notably retail (58.7), construction (56.2), manufacturing (55.7) and transportation (52.8). Optimism in the agricultural sector dropped substantially to 48.9.

Short-term employment plans remain sub-par relative to previous years, while only 50 per cent of business owners expect to make capital purchases in the next few months, which is one of the lowest rates recorded since the recession.

August 2016 findings are based on 603 responses, collected from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received through August 14. Findings are considered accurate to +\- 4.0 per cent 19 times in 20.

Read the August Business Barometer®.

To arrange an interview with Ted Mallett please contact Kiara Morrissey at 416-222-8022, 647-464-2814 or [email protected].

CFIB is Canada’s largest association of small- and medium-sized businesses with 109,000 members across every sector and region.

August 22, 2016

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