October 2020 SME business outlook
As the COVID curve resumed its upward track in October, small business sentiment headed in the opposite direction. CFIB's Business Barometer® index, which is based on a 12-month forward expectation for business performance, fell six points to land at a five-month low of 53.3. Renewed restrictions on businesses in key regions among the hospitality and personal services sectors are undoubtedly headlining the issue, but the decline in optimism is pretty broad based.
Business owners in Ontario and New Brunswick led the pullback, but retrenchment was significant in most other provinces as well. Nova Scotia business owners remain the most upbeat with an index of 63.1 followed by those in British Columbia at 60.3. Weakest perspectives are found in Quebec (42.2), Prince Edward Island (44.0), Newfoundland & Labrador (49.2) and Alberta (52.0). Index levels in the remaining provinces are clustered in the mid-to-high 50s.
The industry picture presents similarly, dropping in 10 of 13 sectors. The range in sentiment is relatively narrow, but businesses in the hospitality, transportation and personal services sectors are the least optimistic about the year ahead.
After improving steadily through the spring and summer, businesses on average are running at only a little under 71 per cent capacity in October, virtually flat since August. There is a wide variation in demand conditions, however, with about one-in-five business running at full tilt while one-in-three are running at 30 per cent capacity or less.
We saw little change in hiring or wage outlooks, capital spending plans, or improvements in order books. Thirty-one per cent of owners say their businesses are in good shape, while 27 per cent say they are in bad shape—roughly unchanged from August and September but still considerably weaker than pre-pandemic norms.
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