Small Business Confidence Surged in May, Reports CFIB

by Staff

The latest data from the Canadian Federation of Independent Business (CFIB) indicates a significant boost in small business confidence. According to the CFIB’s Business Barometer, the 12-month small business confidence index surged by 8.8 points to reach 56.4 in May. This marks a return to more typical seasonal levels and is comparable to the 56.1 recorded in May 2023.

Ontario has played a pivotal role in this resurgence, with its confidence index rising by 9.1 points to 58.1. Noteworthy improvements were also seen in the retail and transportation sectors, which posted gains of 4.9 and 4.7 points, respectively.

“Small businesses are overall feeling cautiously positive heading into the summer,” said Andreea Bourgeois, CFIB’s director of economics. She attributes this optimism to the predictability provided by recently tabled government budgets and the anticipated interest rate cuts in June. Additionally, the cooling labour market has contributed to this positive outlook. Despite some cost pressures and growth limitations remaining above historical averages, Bourgeois finds it reassuring to observe overall improvements in business sentiment.

Price and wage plan increases have stabilized at 2.8% in May, with price increase indicators returning to March levels after a slight rise in April. Labour market pressures also appear to be easing, with 45% of businesses reporting a shortage of skilled labour, down from 47% the previous month. While hiring plans remain cautious, they are more robust than earlier in the year.

“While historically more businesses plan to hire ahead of the busy summer season, this year those hiring plans are more cautious, but at least firms are not looking to lay off either,” Bourgeois added.

However, challenges remain. A significant 68% of businesses report struggling with high tax and regulatory costs. Although the proportion of businesses facing high insurance costs has decreased slightly to 68% from a peak of 72% in April, it remains well above the historical average of 49%.

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