Small business confidence increases slightly in June: CFIB
Many fear future COVID-19 outbreaks could renew closures and interruptions
TORONTO – Small business confidence rose slightly in June to 54.6 points on the Canadian Federation of Independent Business (CFIB) Business Barometer, two points higher than May’s reading but well below historical norms.
“Despite more of the economy reopening, challenging operating conditions are preventing small businesses from being reliably profitable and sentiment is only cautiously improving,” said Ted Mallett, CFIB’s vice-president and chief economist. “Businesses are operating at only 58% of capacity on average (up 9% from May), and many fear future COVID-19 outbreaks could renew closures and interruptions.”
An index level nearer to 65 indicates that the economy is growing at its potential.
Manufacturing confidence rose 3.4 points to 52.3. Business health was good for 20% but bad for 33%. Hiring was cited for 9% over the next three months, but 38% will cut staffing. Companies are operating at an average 57.8%, a 3.4% gain over May’s reading.
In total, 39% of businesses were in bad shape while 19% were in good shape – slight improvements over May.
The top two limits to sales or production growth were insufficient domestic demand (50%) and a shortage of skilled labour (28%). Leading major cost constraints were wages (51%), taxes and regulations (49%) and insurance (48%).
Nova Scotia had the highest optimism level in the country (62.3), followed by PEI (60.9). Quebec had the lowest optimism level (38.1) followed by New Brunswick (46.6). BC (53.6) and Ontario (54) posted results near the national average, while Manitoba (55.3), Alberta (55.7), Newfoundland and Labrador (58.3) and Saskatchewan (59.1) modestly exceeded it.
The natural resources sector posted the lowest sectoral optimism level at 40 index points while wholesale (61.2) and financial services (60.6) had the highest optimism levels and were the only sectors to top 60 index points. All other sectors ranked within five points of the national average.
June findings are based on 919 responses June 2-15, collected from a random sample of CFIB members, to a controlled-access web survey. Findings are statistically accurate to +/- 3.2% 19 times in 20.