Canadian Small Business Confidence Continues to Decline: Survey

Small business confidence continues to plummet in Canada, according to new survey data from the Canadian Federation of Independent Business (CFIB). (Getty Images)

Small business confidence continues to plummet in Canada, according to new survey data from the Canadian Federation of Independent Business (CFIB), as companies grapple with rising costs and labor shortages.

The CFIB says its latest Business Barometer found that more companies are feeling less optimistic this holiday season. The 12-month optimism index fell to 50 points, a level not seen since the pandemic-induced economic slowdown in 2020. Outside of the 2020 decline, November’s decline is the lowest since 2009. The CFIB says that an index level near 65 typically indicates that the economy is growing to its full potential.

“The situation remains worrying for many small businesses,” Simon Gaudreault, the CFIB’s chief economist and research vice president, said in a statement.

“The high costs of doing business, a lack of staff and the constant hikes in interest rates make it more difficult for them to know for sure where their business is headed.”

The CFIB survey found that rising borrowing costs are causing difficulties for 35% of business owners, up from 17% last year. The Bank of Canada has been caught up in one of the most aggressive tightening cycles in its history as it tries to fight rising inflation, issuing six consecutive rate hikes since March, taking the key rate to 3.75%.

The survey also found that 71% of businesses say the main factor limiting business growth is the cost of fuel and energy, followed by a shortage of skilled (53%) and “semi/unskilled” workers (38%).

The findings come ahead of the holiday season, a crucial time for many small businesses, especially those in the retail sector. While the retail sector typically sees optimism levels rising this holiday season, the outlook for retail businesses remains bleak, falling to its third lowest level in 12 months.

An Equifax Canada survey released last week found that 60% of Canadians say they will spend less on gifts this holiday season due to inflation. Equifax Canada also found that only one in four small business owners (25%) say they feel more confident about the 2022 holiday season than they do in 2021, a drop from last year when 36% felt more confident.

“For many, the usual boost they expect to see from holiday sales doesn’t look promising this year,” CFIB economics director Andreea Bourgeois said in a statement.

“With big shopping events – Black Friday, Small Business Saturday and Cyber ​​Monday – approaching this weekend, this is another reminder to support local businesses.”

The CFIB’s monthly Business Barometer survey in November was based on 719 online responses from business group members, with a margin of error of +/- 3.7%, 19 of 20 times.

Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.

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