Small business confidence flat in May: CFIB
39% of reporting manufacturing firms identified business health as bad
TORONTO — Small business confidence has plateaued as of the end of May, dropping by less than a full index point to 52.5 on the Canadian Federation of Independent Business (CFIB)’s Business Barometer.
Manufacturing dropped 4.2 points on the index to 48.9 compared to April. Thirty-nine of reporting firms identified business health as bad, 18% as good. 8% are hiring over the next three months, 43% report intentions to cut staff.
Average capital utilization rose 4.6 points to 54.4%. CFIB said overall, business owners have pulled operations up slightly, but they are still using only 49.1% of available capacity – up a mere 4.8% from two weeks earlier, despite loosened restrictions.
“Despite the easing of restrictions in some parts of the country and continuing government assistance programs, market conditions and uncertainty about the future are holding back many firms,” said Ted Mallett, CFIB’s vice-president and chief economist. “Capacity utilization is up a few percentage points since last week, but still below 50% and staffing plans continue to trend towards cuts in the coming months.”
All categories reporting, 43% of business owners said their business is in bad shape, while 14% estimated that it’s in good shape. Hiring plans are still low, with 13% planning to add on full-time staff in the next three months, and 37% planning to cut back. Insufficient domestic demand continues to be the biggest factor limiting sales and growth.
CFIB reported earlier the share of businesses that are fully open continued to rise with 38% of small firms reporting they are fully open.
New Brunswick and PEI have the largest share of local businesses fully open at 54%, followed by Saskatchewan at 51%. Nova Scotia, Ontario and Newfoundland and Labrador remain as the least open economies.
An index level nearer to 65 indicates that the economy is growing at its potential.
Findings are based on 1,281 responses received May 19-20. Findings are statistically accurate to +/- 2.7 per cent 19 times in 20.