December 2020 SME business outlook
Long-term small business sentiment improved slightly in December as a result of recent announcements of a COVID-19 vaccine and the jolt from holidays shopping. However, short-term business optimism weakened due to stricter restrictions and intense outbreaks of the COVID-19 virus in many provinces.
CFIB's Business Barometer® index, which is based on a 12-month forward expectation for business performance, registered 58.2—about 2.5 points better than in November. The more immediate optimism index based on a 3-month outlook dropped a sharp 4 points and reached 31.5—closer to levels seen in late spring suggesting uncertainty, worry and weak economic expectations.
Operating capacity dropped to 68.4 per cent on average. The share of businesses barely operating (30 per cent capacity or less) is increasing while the share of firms running at full potential (60 per cent capacity or more) is decreasing. The recreation and hospitality sectors remain, by far, well below their normal operating capacity.
The sectoral picture is marked by stricter business operating restrictions which made most sectors register long-term and short-term optimism drops.
Very little movement was noted in other indicators with one exception: investments in computers, communication and information technologies (such as Zoom, Teams, or e-commerce platforms) continue to climb towards more normal levels, currently at 28 per cent.
Andreea Bourgeois, senior analyst, 506 855-2526
Simon Gaudreault, senior director, national research, 514 861-3234