TORONTO—Small business confidence in Canada took a drastic fall in June, hitting its lowest mark since July 2009, according to the Canadian Federation of Independent Business (CFIB).
The Business Barometer index fell almost three points in June to 59.4 from May’s 62.1, a fourth consecutive monthly decline.
“Weak demand appears to be driving this,” CFIB chief economist and vice-president Ted Mallett said in a statement.
“Only 73 per cent of respondents report that new orders are ‘normal’ or better, while 40 per cent say domestic demand is limiting business expansion—both out of tune with recent results.”
According to the CFIB, the drop in optimism is centred almost entirely in Ontario and Quebec (56.8 and 55.3, respectively).
Confidence remains strongest in Alberta (68.6), with Saskatchewan (67.3) edging up, while Newfoundland and Labrador (66.3) and British Columbia (65.6) also came in above the national average.
There is very little change in the under-performing Maritimes, with New Brunswick (59.2) hanging around the national average, and Nova Scotia (53.6) and Prince Edward Island (53.3) lagging behind.
By sector, construction, natural resources and hospitality were weakest, while the information and financial services sectors remained strong.
“Despite weak results, there are signs we are nearing a floor,” Mallett said. “Short-term employment plans are net positive, while reporting of the general state of business health is holding steady.”
Measured on a scale of 0 and 100, an index level above 50 means owners expecting their businesses’ performance to be stronger in the next year outnumber those expecting weaker performance.
According to past results, index levels normally range between 65 and 70 when the economy is growing at its potential.