COVID-19 sapping the confidence of small business
The CFIB Business Barometer tumbles 29 points to a historic low in March
TORONTO — Small business confidence has fallen to a new historic low as companies deal with the effects of the COVID-19 pandemic, according to the Canadian Federation of Independent Business (CFIB)’s latest Business Barometer.
After a 10-point drop earlier in the month, the national confidence level fell a further 19 index points to 30.8 from February’s level of 60.5.
An index level nearer to 65 indicates that the economy is growing at its potential.
“Small business sentiment has never been this low in the Business Barometer’s 32-year history, including during the 2008 and 1990 recessions,” said Ted Mallett, CFIB’s vice-president and chief economist.
One in five owners describe business as good, compared to 38% who say it’s doing poorly. Hiring plans have ground to a halt, with just 5% of business owners planning to add on full-time staff in the next three months and 50% planning layoffs.
All industries experienced a drop in optimism and fell to levels between 21 and 36 index points. The information and recreation sector was the least optimistic, registering at 21.6 index points, followed by manufacturing (24.7) and financial services (27.1).
Businesses in financial services also experienced the biggest drop in confidence, losing 35.4 index points over last month. Personal services (36.1), hospitality (34) and retail (33.4) posted the highest confidence levels, though still well-below the norm.
Quebec experienced the sharpest drop in optimism this month, falling 44.5 index points to 15.7. CFIB attribes the dramatic decline to the province taking quicker and more drastic measures than other provinces to halt the COVID-19 outbreak.
Alberta (26.2) and Newfoundland and Labrador (27.8) had the next lowest results, although they experienced the smallest drops in optimism.
Saskatchewan (28.3) and BC (28.8) both posted levels close to the national average after experiencing 16-point drops, while Ontario (37) and Manitoba (37.5) fared a bit better.
Nova Scotia (44) and New Brunswick (44.6) both experienced large drops in confidence, but remained more upbeat than the rest of the country.
The barometer is based on 1,378 responses from CFIB members to an online survey on March 17 and 18.
Click here for the March Barometer.