June 2020 SME business outlook
As the economy is slowly allowed to reopen, small business sentiment is showing only cautious improvement. CFIB's Business Barometer® index now stands at 54.6, only about two points above May readings and still well below historical norms. Even for business allowed to be fully open, operating conditions remain challenging. On average, businesses are operating at only 58 percent capacity, a 9-point improvement on late May estimates, but well under what is necessary to be reliably profitable.
The provincial optimism profile is patterned largely on the local COVID picture. The outlook in two of the Atlantic provinces (NS and NL) is slightly more positive, with index levels improving to near the 60 mark. Businesses in the Prairie region are also a little more optimistic than the rest. Sentiment, however remains more restrained in Quebec and Ontario, where COVID cases are highest, and in New Brunswick and Prince Edward Island. Owners understand the battle against the virus is unpredictable and that higher infections in the future could result in renewed closures and interruptions.
Sector results display a fair bit of variation. Weakness is most focused in the agriculture, resources and recreation sectors. Retail businesses are also less optimistic than the average.
Hiring plans remain extremely tentative, despite loosening operating restrictions. Only 14 per cent of owners expect to add full-time staff in the next few months, compared to 33 per cent who plan to pare further. While improved over last month, the numbers of businesses in bad shape (39%) also still widely outnumber those in good shape (19%). In addition, accounts receivable and new orders performance continue to underperform by a wide margin and capital expenditure plans remain muted.
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