Business Barometer: Small business 12-month outlook trends up, but other measures of health remain low

Submitted by admin on Thu, 07/30/2020 - 23:44

Small business outlook for the next 12 months is on the mend, but other measures of business health remain far below historic norms, according to the Canadian Federation of Independent Business (CFIB)’s Business Barometer®. The index of small business optimism reached 61.3 points in July.

“While it appears small business owners are feeling more confident about where they’ll be in a year, the unique nature of this economic shock is complicating the way we look at traditional indicators,” said Ted Mallett, CFIB’s chief economist. “It’s likely that many business owners have much lower expectations of what good performance means 12 months out. Shorter-term outlooks are still very weak. Additionally, we might be seeing some survivor bias at play— a notable number of weaker businesses polled in the spring are no longer responding to the survey, suggesting many may have failed in June and July.”

In total, 37 per cent of business owners said their business was in bad shape while 22 per cent said it was in good shape, a small improvement over June’s numbers. Hiring plans remained stagnant, with 14 per cent of business owners expecting to add full-time staff in the next three months and 30 per cent planning to cut back. Businesses’ shorter range 3-month outlooks are still on the same level as the 2008-09 recession.

Provincial results: Ontario and Nova Scotia businesses most upbeat

Ontario posted the highest optimism level at 66.0, followed by Nova Scotia (62.4), Saskatchewan (58.3) and Alberta (58.1). Quebec (39.6), Prince Edward Island (41.7) and New Brunswick (50.5) posted the lowest results. British Columbia (55.0), Manitoba (55.5) and Newfoundland and Labrador (56.1) were middle of the pack this month.

Industry results: Natural resources agriculture and arts and recreation post lowest results

The natural resources (40.9), agriculture (42.8), and arts and recreation (47.1) sectors were the least optimistic this month. Professional services (62.9), wholesale (62.6) and retail (62.0) came in at the higher end of the optimism scale.

An index level nearer to 65 indicates that the economy is growing at its potential.

Read the July Business Barometer®