Monthly Business Barometer®

August 2023 Results

Small business optimism in Canada
CFIB’s Business Barometer® long-term index, which is based on 12-month forward expectations for business performance, gained 0.4 point to 54.8. The short-term optimism index, based on a 3-month outlook, dropped to 47.9, 1.2 points lower than July.

Provincial picture
Most Western provinces have gained in optimism over the long term, with Saskatchewan seeing the biggest increase overall (+3.7), while BC was the lone province with a slight decrease (-0.6). Ontario recorded an increase (+2.2) and Quebec remained stable (-0.1). All Atlantic provinces besides Nova Scotia displayed a decline in long-term optimism. Only three provinces, Prince Edward Island (68.4), Nova Scotia (60.2) and Alberta (59.8), were in line with more normal optimism levels this month. 

Sectoral picture
Agriculture (42.0), retail (47.1) and transportation (51.3) businesses had the lowest confidence, while those in the information and recreation (67.0), health and education (63.9) and finance, insurance, real estate and leasing (63.2) sectors topped the rankings.

Domestic demand
The share of businesses indicating that insufficient domestic demand is constraining sales or production growth has climbed to 40%. It has been on an upward trend since its low of 21% in June 2022, and has now surpassed its historical average of 36%.

Inflation indicators
Both the average price and wage increase plans for the next 12 months declined in August, now sitting at 3.0% and 2.5%, respectively, sharply down from their mid-2022 peaks of 4.9% and 3.6%, and continued to close the gap with their historical averages of 2.1% and 1.8%.  Compared to the middle of last year, the share of businesses that plan to raise wages and prices by 6% or more has been reduced by almost two thirds, and overall price and wage plan distributions are slowly trending towards their pre-pandemic shares.

Factors limiting sales or production growth - current levels and trend, August 2023

Major input cost constraints - current levels and trend, August 2023

Methodology

August findings are based on 464 responses from a stratified random sample of CFIB members, to a controlled-access web survey. Data reflect responses received from August 3 to the 14. Findings are statistically accurate to +/- 4.5 per cent 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 next Business Barometer will be released on September 28, 2023.

Andreea Bourgeois, Director of Economics

Simon Gaudreault, Vice-President, Research and Chief Economist