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Business Barometer, March 2021

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March  2021 SME business outlook

Small business sentiment for long-term and short-term outlooks soared in March - mostly driven by improved optimism in the two largest provinces.

CFIB’s Business Barometer® Index, which is based on 12-month forward expectations for business performance, reached 68.2—denoting solid optimism in the long term. The more immediate optimism index based on the 3-month outlook gained almost 6 points and reached 52.2. 

Overall, operating capacity increased to 65.2 per cent. However, firms in some sectors are far from that. One-third of businesses in arts and recreation are presently still closed and almost none are operating at full capacity.  

The provincial short-term expectations improved in all provinces but NL where they stayed constant. Ontario, Quebec, and Saskatchewan all had double-digits improvements. The long-term outlook had more modest improvements; still most provinces range currently around the 40s to mid-50s mark. 

Short-term sectoral outlook improved in all sectors driven by retail, and professional and enterprise services. Long-term expectations also gained in optimism, all sectors reaching high-50s to 60s levels. 

While expectations are marked by improved optimism, all other business indicators do not show any signs of improving yet. Staffing plans and general business health are stagnant; while investment plans are only modestly better in March. 

Measured 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 75 when the economy is growing at its potential. 

Andreea Bourgeois, senior analyst, [email protected]
Simon Gaudreault, senior director, national research, [email protected]