October 2018 SME business outlook survey results
If anyone expected resolution of a trade agreement to reinvigorate small business optimism in Canada, it didn’t happen—at least in the immediate short term. Despite a long-awaited, but last minute conclusion of a North American trade deal, CFIB’s Business Barometer® Index in fact dropped to 60.5 in October—about one point under September and August levels.
There are many other factors beyond trade agreements that drive business sentiment, and it showed among the various sub-indices. Improvements in optimism in Ontario, British Columbia and New Brunswick were offset by declines in Quebec, Saskatchewan and to some degree, Prince Edward Island, Newfoundland & Labrador and Nova Scotia. The Island (70.8) and Quebec (66.2) still have the nation’s most optimistic business owners, but their lead is now substantially smaller than in past months. With index scores in the low 50s, business owners in Alberta, Saskatchewan and Newfoundland & Labrador remain the country’s least upbeat.
Sector breakouts show a large improvement in retailer sentiment, but a loss in the hospitality sector. Most other sectors show an improvement, but it would largely be a result of holdover effects from moving averaging of previous months’ results.
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.
There was a slight loss in the proportion of owners who say their businesses were in good shape this month (43 per cent), together with an easing of hiring plans—down to only 16 per cent who plan to hire additional full-time staff in the next few months versus 14 per cent who plan to cut back. Capacity rather than demand factors appear to be significant, however, with a record high 47 per cent of businesses reporting that they are experiencing shortages of skilled labour.
Ted Mallett, vice-president & chief economist, 416 222-8022
Andreea Bourgeois, senior analyst, 506 855-2526
Simon Gaudreault, senior director, national research, 514 861-3234