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Small business sentiment in May has bounced back from a poor showing in April. CFIB’s Business Barometer® index jumped almost 6 points to 62.5—in line with readings from January and February, but below the previous peak of 66.0 registered in May 2017.
It may turn out that the weak April results were an aberration, possibly a result of poor weather in many parts of the country, and that May confidence levels are back closer to a more 'normal' setting. Ontario businesses led the upward charge, pushing their index up 7.8 points to 64.7, now well above the national average for the first time in a year. Five-plus point shifts in PEI (up) and Saskatchewan (down) were the next most-significant changes this month. The other provinces showed relatively little movement, in part because their indexes are tied to multi-month moving averages that still partially include April results.
PEI and Quebec business owners are the most upbeat, followed by those in Nova Scotia and Ontario, while the least optimistic are in Saskatchewan and Newfoundland & Labrador. Across sectors, relative weakness in the resources and hospitality industries is countered with relative strength in financial services and transportation.
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.
The other metrics on business performance and expectations are mixed. Full-time staffing intentions are improved, which is common for this time of year, but not to the point we had seen in past years. Owners’ views on their general state of business, however are quite positive—40 per cent who say they are in 'good' shape versus only 9 percent in 'bad' shape.
Ted Mallett, vice-president & chief economist, 416 222-8022
Andreea Bourgeois, senior analyst, 506 855-2526
Simon Gaudreault, director, economic affairs, Quebec, 514 861-3234